EXHIBIT 10.29
Xxxxx Xxxxxx Standardized 401(k) Profit-Sharing Adoption Agreement (No. 005) (To
Be Used with Basic Plan Document No. 03 Only)
SECTION I: EMPLOYER INFORMATION:
Name of Employer: Kevco, Inc.
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Employer Tax Identification Number: 75 - 1456023
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Employer's Fiscal Year:
[X] Calendar Year or
[_] 12-month period beginning on ___________ and ending on ____________
Month/Day Month/Day
Plan Year: Same as the Employer's Fiscal Year, unless otherwise indicated below:
[_] Calendar Year or
[_] 12-month period beginning on _____________ and ending on the last day
Month/Day
of _____________
Month
IMPORTANT: You must fill out this Adoption Agreement completely. If you fail to
complete certain Sections, some options are automatically presumed, and you
should be certain that these are the options you want. Failure to complete the
Adoption Agreement properly may result in Plan disqualification.
SECTION II: EFFECTIVE DATES (Check Option 1 or 2):
[_] Option 1: This is the initial adoption of a 401(k) profit-sharing plan by
the Employer:
The Effective Date of this Plan will be the first day of the Plan
Year in which this Adoption Agreement is signed unless otherwise
indicated below:
[_] The Effective Date of this Plan is __________ ,19 _____
[X] Option 2: This is an amendment and restatement of an existing 401(k)
profit-sharing plan (a "Prior Plan").
The Effective Date of the Prior Plan was 12/20, 1976.
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The Effective Date of this amendment and restatement will be the
first day of the Plan Year in which this Adoption Agreement is
signed unless otherwise indicated below:
The Effective Date of this amendment and restatement is 1/1,
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1993.
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SECTION III: ELIGIBILITY REQUIREMENTS AND SERVICE CREDITING RULES
(Complete a through j):
Each Employee becomes eligible to participate in this Plan as follows:
(a) At age 21 unless otherwise indicated below:
18 (Fill in only if minimum age is to be younger than age 21).
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Age
(b) Union Employees will be excluded from the Plan unless otherwise indicated
below:
[_] Union Employees will be included.
(c) Nonresident Aliens having no U.S. earned income will be excluded from the
Plan unless otherwise indicated below:
[_] Nonresident Aliens will be included.
(d) After completing 1 Year of Eligibility Service, unless otherwise indicated
below:
[_] After completing 2 Years of Eligibility Service, except that Elective
Deferrals may be made after completing 1 Year of Eligibility Service.
[_] After completing _________ months of eligibility service, but no later
than after 1 Year of Eligibility Service for making Elective
Deferrals. (Enter months from 0 to 23 months.)
[_] After completing _________ months of eligibility service, but
eligibility upon date of hire for making Election Deferrals. (Enter
months from 0 to 23 months.)
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[_] Immediate eligibility for Employees as of (Enter date) _________ , and
after completing _________ (not more than 2) Years of Eligibility
Service for new hires.
NOTE: USING A 2-YEAR ELIGIBILITY REQUIREMENT OR REQUIRING MORE THAN 12 MONTHS OF
ELIGIBILITY SERVICE AUTOMATICALLY REQUIRES USE OF THE 100% FULL AND IMMEDIATE
VESTING OPTION IN SECTION IV (OPTION I).
(e) The Entry Dates of the Plan are semi-annual - on the first day of the Plan
Year and the first day of the 7th month of the Plan Year (i.e. Jan 1/July 1
for calendar year plans), unless otherwise indicated below:
[_] Quarterly Entry Dates: 1/1; 4/1; 7/1; and 10/1 for salary deferral
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contributions 6/30 and 12/31 for profit sharing contributions
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Month/Day
[_] Monthly Entry Dates on the first day of each month.
[_] Annual Entry Date: _________________
Month/Day
NOTE: AN ANNUAL ENTRY DATE MAY NOT BE USED WHERE MORE THAN 6 MONTHS OF
ELIGIBILITY SERVICE ARE REQUIRED FOR AN EMPLOYEE TO BECOME ELIGIBLE TO
PARTICIPATE IN THE PLAN. ALSO, AN ANNUAL ENTRY DATE MAY NOT BE USED WHEN THE
MINIMUM ELIGIBILITY AGE IS OVER 20-1/2 YEARS.
(f) Counting Service - Service is counted on the basis of the Hours of Service
for which an Employee is actually paid or entitled to payment, unless
otherwise indicated below:
[_] Determined on the basis of days worked, by crediting the Employee with
10 Hours of Service for each day for which he or she would be credited
with at least 1 Hour of Service under Section 1.20 of the Plan.
[_] Determined on the basis of weeks worked, by crediting the Employee
with 45 Hours of Service for each week for which he or she would be
credited with at least 1 Hour of Service under Section 1.20 of the
Plan.
[_] Determined on the basis of semi-monthly payroll periods worked, by
crediting the Employee with 95 Hours of Service for each semi-monthly
payroll period for which he or she would be credited with at least 1
Hour of Service under Section 1.20 of the Plan.
[X] Determined on the basis of months worked, by crediting the Employee
with 190 Hours of Service for each month for which he or she would be
credited with at least 1 Hour of Service under Section 1.20 of the
Plan.
[_] Determined on the basis of 12 consecutive months worked (i.e., elapsed
time), by crediting the Employee with 1 Year of Eligibility Service or
1 Year of Vesting Service, as applicable, for each 12 consecutive-
month period of work.
(g) Both Year of Eligibility Service and Year of Vesting Service mean 1000
Hours of Service unless otherwise indicated below:
[_] _____ Hours for a Year of Eligibility Service (enter a number of Hours
less than 1000).
[_] _____ Hours for a Year of Vesting Service (enter a number of Hours
less than 1000).
[_] A 12 consecutive-month period (beginning on the Employee's first day
of work for the Employer) for a Year of Eligibility Service.
[_] A 12 consecutive-month period (beginning on _____________ of each
year) for a Year of Vesting Service. Month/Day
(h) Service with Predecessor Employer - Service with the following predecessor
employer(s):
Service Supply Systems, Inc.
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Is counted for purposes of:
[X] Eligibility
[X] Vesting
(i) Years of Eligibility Service and Years of Vesting Service will not include
any period during which the Employer did not maintain the Plan or any
"predecessor plan" under the applicable Treasury Regulations, unless
otherwise indicated below:
[X] Years of Eligibility Service and Years of Vesting Service will include
periods prior to maintaining the Plan.
(j) Breaks in Service will be considered under the Plan, except as otherwise
indicated below:
[X] Breaks in Service will not be considered.
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SECTION IV: VESTING (Choose only 1 option):
A Participant becomes Vested in his or her Individual Account attributable to
Employer Contributions and Forfeitures as follows or, if earlier, at Normal
Retirement Age:
[X] Option 6 with
[_] Option 5 with Option 3 (1-4)
Completed [_] Option_(1-4) ---
Year of Vesting [_] [_] [_] Option 4 In Top- In Top-
Service Option 1 Option 2 Option 3 (Complete if Chosen) Heavy Year Heavy Year
1 100% 0% 0% ___% 0% 0%
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2 100% 0% 20% ___% 0% 0%
(not less than 20%)
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3 100% 100% 40% ___% 0% 20%
(not less than 40%)
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4 100% 100% 60% ___% 0% 40%
(not less than 60%)
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5 100% 100% 80% ___% 100% 60%
(not less than 80%)
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6 100% 100% 100% 100% 100% 80%
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7 100% 100% 100% 100% 100% 100%
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SECTION V: INCLUDED COMPENSATION (Complete a through d):
(a) Compensation is determined for the Plan Year, unless otherwise indicated
below:
[_] Compensation is determined for the calendar year ending within the
Plan Year.
(b) Compensation includes amounts paid prior to the date the Employee became a
Participant, unless otherwise indicated below:
[_] Compensation does not include pre-participation earnings.
(c) Compensation means all of a Participant's W-2 Earnings, generally, unless
otherwise indicated below:
[_] Compensation means "Section 3401(a) wages" as defined in Section 1.07
of the Plan.
[_] Compensation means "415 safe harbor compensation" as defined in
Section 1.07 of the Plan.
For sole proprietors and partners, Compensation means "compensation," as
that term is defined under Section 415(c)(3) of the Code.
(d) Compensation includes Employer Contributions made under a salary reduction
agreement under the following types of plans: Sections 125, 401(k),
408(k), 403(b), unless otherwise indicated below:
[_] Compensation does not include Employer Contributions made under salary
reduction agreement.
SECTION VI: NORMAL RETIREMENT AGE:
Normal Retirement Age means age 65 unless otherwise indicated below:
[_] The later of age _____ (not to exceed 65) or the _____ (0 to 5th)
anniversary of the Participant's participation commencement date. The
Participant's participation commencement date is the first day of the first
Plan Year in which the Participant commenced participation in the Plan.
SECTION VII: PROFIT-SHARING CONTRIBUTIONS (Complete a and b):
(a) Employer Contributions -
Contributions Not Limited to Profits - Employer Contributions to the Plan
are not limited to current and accumulated profits of the Employer's
business, unless otherwise indicated below:
[_] Employer Contributions, other than Elective Deferrals, are limited to
the current and accumulated profits of the Employer's business.
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Method of Allocation:
[_] Non-Integrated - The Employer Profit-Sharing Contribution to the Plan
for each Plan Year will be divided among Participants' Individual
Accounts in the ratio which each Participants Compensation bears to
the Compensation of all Participants.
[_] Allocation under the Social Security Integration (permitted disparity)
rules described in Section 3.01(B)(3) of the Plan - Under this option,
a larger percentage of the Employer Profit-Sharing Contribution is
allocated to each Participant's Compensation in excess of the
Integration Level selected (that is, the "Excess Compensation"). This
option is not available to an Employer with another integrated plan
benefiting the same participants. Excess Compensation means the
portion of Compensation that exceeds the Social Security Taxable Wage
Base in effect as of the beginning of the Plan Year, unless a
different Integration Level is selected below:
[_] $ ____ (enter a dollar amount lesser than the Taxable Wage Base.)
[_] ____ % of the Taxable Wage Base (not to exceed 100%).
Forfeitures - Forfeitures in each Plan Year will be applied to reduce the
Employer ContrIbution for that Plan Year, unless otherwise indicated below:
[X] Forfeitures will be allocated to the Individual Account of each
Participant eligible to receive an Employer Contribution in the same
manner as that chosen for the allocation of Employer Contributions.
NOTE: IF YOU HAVE SELECTED ALLOCATION UNDER THE SOCIAL SECURITY INTEGRATION
RULES FORFEITURES WILL BE ALLOCATED TO THE INDIVIDUAL ACCOUNTS OF ELIGIBLE
PARTICIPANTS.
Allocation Requirements - A Participant will share in the Employer Contribution
for a Plan Year as provided in Section 3.01(B)(2)(a) of the Plan, except as
indicated below:
[_] A Participant who has less than 501 Hours of Service during the Plan
Year must be employed by the Employer on the last day of the Plan Year
to share in the Employer Contribution for that Plan Year.
[X] A Participant who has less than 501 Hours of Service during the Plan
Year must be employed by the Employer on the last day of the Plan Year
to share in the Employer Contribution for that Plan Year unless the
Participant's employment with the Employer terminated in that Plan
Year after he or she attained Normal Retirement Age or because of his
or her death or Disability.
(b) Employee Contributions -
Rollover contributions [X] will [_] will not be permitted.
Direct plan-to-plan transfers [X] will [_] will not be permitted.
After-Tax Employee contributions will not be permitted unless otherwise
elected below :
[_] After-Tax Employee contributions will be permitted up to ___% of
Compensation or $___ in each payroll period.
SECTION VIII: 401(k) FEATURES (Complete a through h):
(a) Participant 401(k) Elective Deferral Contributions:
(1) Each Participant's 401(k) Elective Deferrals are limited by an annual
dollar amount set under Section 402(g) of the Code. Subject to that
limit, each Participant may make Elective Deferrals in an amount up
to:
[X] 15% of the Participant's Compensation.
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[X] $ ____ for each payroll period.
(2) Participants may begin making Elective Deferrals, or change their
Elective Deferral election amounts, as of:
[_] begin [_] change
the first business day of each month
[X] begin [X] change *
the first business day of the first, fourth, seventh and tenth months
of the Plan Year
[_] begin [_] change
the first business day of the first and seventh months of the Plan
Year
[_] begin [_] change
the first business day of the Plan Year
[_] begin [_] change
Other:__________________________________________ (Specify)
* Contributions may be stopped at anytime after 15 days' advance notice.
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(3) A Participant's Elective Deferrals will apply to the Participant's cash
bonuses, unless otherwise indicated below:
[_] Elective Deferrals will not be made from cash bonuses.
[_] Participants will be given the option of making Elective
Deferrals from cash bonuses.
[_] The Employer will decide annually whether to permit Elective
Deferrals from cash bonuses for that Plan Year.
(b) Employer Matching Contributions:
(1)(A) The Employer will make Matching Contributions to the Plan on behalf
of all Participants who make Elective Deferrals in the amount of:
[_] ______ % of that Plan Year's Elective Deferrals.
[_] The sum of _______ % of the portion of the Elective Deferrals
not in excess of _______ of the Participant's Compensation,
plus _______ % of the portion of the Elective Deferrals in
excess of _______ % of the Participant's Compensation, but not
greater than ______ % of the Participant's Compensation.
[_] The Employer will not match Elective Deferrals above $_______
or above _______ % of the Participant's Compensation.
[X] An amount determined by the Employer for each Plan Year.
(B) The Employer will make Matching Contributions to the Plan on behalf
of all Participants who make After-Tax Employee contributions in
the amount of:
[_] ______ % of that Plan Year's After-Tax Employee contributions.
[_] The sum of _______% of the portion of the After-Tax Employee
contributions not in excess of _______ % of the Participant's
Compensation, plus ______ % of the portion of the After-Tax
Employee contributions in excess of ______ % of the
Participant's Compensation, but not greater than _____ % of
the Participant's Compensation.
[_] The Employer will not match After-Tax Employee contributions
above $ ______ or above _______ % of the Participant's
Compensation.
[_] An amount determined by the Employer for each Plan Year.
(C) The Employer will make Matching Contributions to the Plan on behalf
of all Participants (as provided under (A) or (B) above), unless
otherwise indicated below:
[_] Matching Contributions will only be made on behalf of
Participants who are not Highly Compensated Employees.
NOTE: IF THE SECOND OPTION UNDER SECTION VIII(b)(1)(A) OR (B) IS SELECTED, THE
PERCENTAGE SPECIFIED IN THE THIRD BLANK SPACE MUST NOT EXCEED THE PERCENTAGE
SPECIFIED IN THE FIRST BLANK SPACE. IF THE FORTH OPTION UNDER SECTION
VIII(b)(1)(A) OR (B) IS SELECTED, ANY EMPLOYER CONTRIBUTION MADE TO THE PLAN
MUST FIRST BE ALLOCATED TO SATISFY THE DISCRETIONARY MATCHING CONTRIBUTION AND
THEN TO SATISFY ANY DISCRETIONARY PROFIT-SHARING CONTRIBUTION.
(2) Matching Contributions will be subject to Vesting under the schedule
selected in Section IV, unless otherwise indicated below:
[_] Matching Contributions are fully Vested when made.
(3) Allocation Requirements - A Participant who makes Elective Deferrals
or After-Tax Employee contributions, as applicable, will share in any
applicable Matching Contributions for his or her Elective Deferrals or
After-Tax Employee contributions made, respectively, in a Plan Year as
indicated below:
[_] A Participant who makes Elective Deferrals this or After-Tax
Employee contributions, as applicable, is not required to be
employed by the Employer on the last day of the Plan Year to
receive Matching Contributions for his or her Elective Deferrals
or After-Tax Employee contributions made, respectively, in that
Plan Year.
[_] A Participant who has less than 501 Hours of Service during the
Plan Year and who makes Elective Deferrals or After-Tax Employee
contributions, as applicable, must be employed by the Employer on
the last day of the Plan Year to receive Matching Contributions
for his or her Elective Deferrals or After-Tax Employee
contributions made, respectively, in that Plan Year.
[_] A Participant who has less than 501 Hours of Service during the
Plan Year and who makes Elective Deferrals or After-Tax Employee
contributions, as applicable, must be employed by the Employer on
the last day of the Plan Year to receive Matching Contributions
for his or her Elective Deferrals or After-Tax Employee
contributions made, respectively, in that Plan Year, unless the
Participant's employment with the Employer terminated in that
Plan Year after attaining his or her Normal Retirement Age or
because of his or her death or Disability.
5
(4) Forfeited Matching Contributions will be used by the Employer to make
the Matching Contributions in (1)(A) or (B) above, as applicable,
unless otherwise indicated below:
[_] Forfeited Matching Contributions will be allocated among
Participants' Accounts as if they were additional Matching
Contributions.
(c) Qualified Nonelective Contributions-These are fully Vested Employer
Contributions used, to the extent needed, to enable the Plan to satisfy the
nondiscrimination tests under Section 401(k) of The Code. (See also
paragraph (d) below, which may be elected with or without an election being
made under this paragraph.)
(1) Qualified Nonelective Contributions will be allocated to the
Individual Accounts of only Participants who are not Highly
Compensated Employees, unless otherwise elected below:
[_] Qualified Nonelective Contributions will be allocated to the
Individual Accounts of all Participants.
(2) The Employer will make Qualified Nonelective Contributions to the
Plan for each Plan Year in an amount determined by the Employer
from Plan Year to Plan Year, unless a percentage contribution is
elected below:
[_] Qualified Nonelective Contributions will be made in an amount
equal to ______ % (not more than 15%) of the Compensation of all
Participants eligible to share in the Qualified Nonelective
Contribution.
[_] Qualified Nonelective Contributions will be made in an amount
equal to ______ % of the current and accumulated profits of the
Employer's business, but not more than $ _______ for any Plan
Year.
(3) Qualified Nonelective Contributions will be divided among
Participants' Individual Accounts in the ratio which each
Participant's Compensation bears to the Compensation of all
Participants, unless the following option is selected:
[_] Allocated according to the ratio that each Participants
Compensation not greater than $ _____ for the Plan Year, bears to
the total Compensation of all Participants not greater than
$ _____ for the Plan Year.
(d) Qualified Matching Contributions - These are fully Vested Employer Matching
Contributions used, to the extent needed, to enable the Plan to satisfy the
nondiscrimination tests under Section 401(m) of the Code. (See also
paragraph (c) above, which may be elected with or without an election being
made under this paragraph.)
(1) The Employer will make Qualified Matching Contributions to the Plan on
behalf of all Participants who are not Highly Compensated Employees
and who make Elective Deferrals, unless otherwise elected below:
[_] Qualified Matching Contributions will be made on behalf of all
Participants who make Elective Deferrals.
(2) The amount of Qualified Matching Contributions made on behalf of each
Participant will be:
[_] _______ % of his or her Elective Deferrals for that Plan
Year.
[_] The sum of_______ % of the portion of the Elective Deferrals not
greater than _______ % of the Participant's Compensation, plus
_______ % of the portion of the Elective Deferrals in excess of
_______ % of the Participant's Compensation, but not over ______%
of the Participant's Compensation.
[_] The Employer will not match Elective Deferrals above $ _______ or
above _______ % of the Participant's Compensation.
[X] An amount determined by the Employer for each Plan Year.
NOTE: IF THE SECOND OPTION UNDER SECTION VIII(d)(2) IS SELECTED, THE PERCENTAGE
SPECIFIED IN THE THIRD BLANK SPACE MUST NOT EXCEED THE PERCENTAGE SPECIFIED IN
THE FIRST BLANK SPACE. IF THE FOURTH OPTION UNDER SECTION VIII (d)(2) IS
SELECTED, ANY EMPLOYER CONTRIBUTION MADE TO THE PLAN MUST FIRST BE ALLOCATED TO
SATISFY THE DISCRETIONARY MATCHING CONTRIBUTION AND THEN TO SATISFY ANY
DISCRETIONARY PROFIT-SHARING CONTRIBUTION.
(e) Passing the ADP Test - Qualified Matching Contributions and Qualified
Nonelective Contributions may be taken into account as Elective Deferrals
for purposes of passing the "ADP" test under Section 401(k) of the Code. In
determining Elective Deferrals for the ADP test, the Employer will include,
to the extent needed to pass the test:
[_] Qualified Matching Contributions.
[_] Qualified Nonelective Contributions under this Plan or any other
Employer plan.
[_] Both Qualified Matching Contributions and Qualified Nonelective
Contributions.
6
(f) Passing the ACP Test - Qualified Nonelective Contributions and Elective
Deferrals may be taken into account for purposes of passing the "ACP" test
under Section 401(m) of The Code. In determining contributions for the ACP
test, the Employer will include, to the extent necessary to pass the test
[_] Qualified Nonelective Contributions.
[_] Elective Deferrals.
[_] Both Qualified Nonelective Contributions and Elective Deferrals.
(g) Excess Elective Deferrals - All of a Participant's Excess Elective
Deferrals, whether under this Plan another Employer plan, or any other
plan, will be assigned to this Plan if the Participant notifies the Plan
Administrator in writing by 3/1 (any date before April 15).
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If no date is selected, the Employee's written notice must be submitted by
at least ten business days before April 15.
(h) Treatment of "Stub Period" Earnings or Losses - Earnings or Losses
occurring between the last annual Valuation Date and the date of
distribution of Excess Elective Deferrals, Excess Aggregate Contributions
and Excess Contributions will be disregarded under the Plan, unless
otherwise indicated below:
[_] Stub period earnings will be distributed along with any Excess
Elective Deferrals, Excess Contributions or Excess Aggregate
Contributions in accordance with the method prescribed in Article XI
of the Plan.
Section IX: OTHER OPTIONS (Complete a through d):
(a) Individual account investments will be directed as follows:
[X] Investment of Employee contributions will be participant-directed.
[X] Investment of Employer Contributions will be participant-directed.
[_] Investment of Employee contributions will be directed by:
__________________________________________________________ (Specify)
[_] Investment of Employer Contributions will be directed by:
__________________________________________________________ (Specify)
If no box is checked, the Employer directs all account investments.
(b) Participant loans [_] will [X] will not be permitted.
(c) In-service withdrawals of Employer Contributions and their investment
earnings [_] will [X] will not be permitted under Section 6.01(A)(3) of the
Plan.
If in-service withdrawals of Employer Contributions and their investment
earnings are permitted, they will be allowed [_] to the extent Vested or
[_] only after all Employer Contributions have Vested, and, unless the
Participant has 5 or more years of Plan participation, only from Employer
Contributions that have been in the Plan for at least 2 years, as follows
(Choose 1):
[_] At any time.
[_] At or after attaining age 59-1/2.
[_] Upon hardship under Section 6.04 only.
[_] At or after attaining age 59-1/2 or upon hardship under Section 6.04.
(d) In-service withdrawals of nondeductible or deductible Employee
contributions and their investment earnings [_] will [_] will not be
permitted under Section 3.02 and/or 6.04 of the Plan.
If rollover contributions and/or direct plan-to-plan transfers are
permitted, in-service withdrawals of these contributions and transfers and
their investment earnings [X] will [_] will not be permitted under Section
3.03, 3.04 and/or 6.04 of the Plan.
If in-service withdrawals of Employee contributions and their investment
earnings are permitted they will be allowed as indicated below (Choose 1):
[X] At any time.
[_] At or after attaining age 59-1/2 only.
[_] Upon hardship under Section 6.04 only.
[_] At or after attaining age 59-1/2 or upon hardship under Section 6.04.
(e) In-service withdrawals of Elective Deferrals [X] will [_] will not be
permitted under Section 11.05(C) of the Plan. * Provided that the
participant signs a written representation [as set forth in Treas. Reg.
Section 1.401 (k)-1(d)(2)(iii) (B)] that the amount requested is necessary
to satisfy a financial hardship.
7
(f) Distribution options - The following distribution options will be available
under the Plan (Choose at least 1):
[X] Lump sum payment.
[_] In (Choose 1) [_] monthly, [_] quarterly, [_] semi-annual or [_]
annual installments for a period not to exceed (Choose 1) [_] the life
expectancy of the Participant or [_] the joint and last survivor life
expectancy of the Participant and his or her Beneficiary.
[_] The purchase of an annuity contract.
(g) Highly Compensated Employees shall include both Highly compensated active
employees and highly compensated former employees, unless otherwise
indicated below:
[X] Highly Compensated Employees shall be determined under the
"simplified method" described in Section 1.19 of the Plan.
[_] Highly Compensated Employees shall be determined under the
"simplified snapshot method" described in Section 1.19 of the Plan.
The snapshot day will be ___________.
(The date selected must be a single day during the Plan Year that is
reasonably representative of the Employer's workforce and the Plan's
coverage throughout the Plan Year. In addition, if the Employer uses a
snapshot day in substantiating compliance with the nondiscrimination
requirements, the same snapshot day must be used.)
SECTION X: LIMITS ON ANNUAL ADDITIONS/TOP-HEAVY (Complete a through e):
(a) Defined Contribution Plan Coordination - If any Participant is covered
under another qualified defined contribution plan maintained by the
Employer other than a master or prototype plan, the provisions of Section
3.05(B) of the Plan will apply as if the other plan were a master or
prototype plan, unless otherwise indicated below:
[_] The total Annual Additions will be limited to the Maximum Permissible
Amount and excess amounts will be reduced in a manner that precludes
Employer discretion, as follows:
___________________________________________________________________________
___________________________________________________________________________
(b) Defined Benefit Plan Coordination - If any Participant is or has ever been
a participant in 1 or more qualIfied defined benefit plans maintained by
the Employer, the benefit under the plans will be limIted by reducing
benefits under the defined benefit plans, to the extent possible, before
reducing Annual Additions under this Plan, unless a different method that
precludes Employer discretion is otherwise indicated below:
___________________________________________________________________________
___________________________________________________________________________
(c) Limitation Year - The Limitation Year for purposes of limiting benefits to
the extent required by Section 415 of the Code will be the Plan Year,
unless a different 12-month period (e.g., calendar year, fiscal year) is
indicated below:
___________________________________________________________________________
(d) Minimum Contribution For Top-Heavy Plan - If the Employer maintains 1 or
more defined benefit plans in which a Participant participates in addition
to this Plan and does not maintain any other defined contribution plan in
which the Participant participates, the minimum benefit requirement that
applies to Top-Heavy Plans will be provided under this Plan, and the
additional minimum benefit will also be provided under this Plan, unless
otherwise indicated below:
[_] The additional minimum benefit will not be provided under this Plan.
(e) Top-Heavy Aggregation Assumptions - If the Employer maintains plans that
are required to be aggregated for "top-heavy" purposes, an interest rate
and mortality table must be indicated below. If none is indicated and only
a defined benefit plan is required to be aggregated, the defined benefit
plan's interest rate and mortality table will apply.
[_] Specify interest rate ____________________________
[_] Specify mortality table __________________________
SECTION XI: APPOINTMENT OF TRUSTEE (Choose and complete only 1):
IMPORTANT REMINDER: The PaineWebber Standard Form Trust Agreement is a part of
this Plan.
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[X] Option 1: PW Trust Company as Trustee (see instructions for services
provided and related fees). Signature of PW Trust Company
Authorized Representative:
___________________________________
[ ] Option 2: Individual Trustee(s)
Trustee Name: ____________________ Signature: ___________________
Trustee Name: ____________________ Signature: ___________________
Trustee Name: ____________________ Signature: ___________________
[ ] Option 3: Other Trust Company
Name of Trust Company: __________________________________________
Signature of Authorized Representative: _________________________
SECTION XII: EMPLOYER SIGNATURE:
I am an authorized representative of the Employer and certify the following:
. I acknowledge that I relied on my own attorney and/or tax adviser
for the completion of this Adoption Agreement and with respect to
the legal and tax implications of adopting this Plan.
. I understand that if the Employer makes any changes to the
prototype Adoption Agreement or Plan and Trust document, other than
by adoption of any amendment made by PaineWebber Incorporated, the
sponsoring organization of this prototype, the Plan will no longer
be a prototype plan and the rules and procedures of the Internal
Revenue Service that apply to individually-designed plans will
apply.
. I understand that PaineWebber Incorporated, the sponsoring
organization of this prototype, will inform the adopting Employer
of any amendments made to the prototype or of the discontinuance or
abandonment of the prototype, provided that the Employer keeps
PaineWebber informed of the Employer's current address.
. I have received and read a copy of the Plan and Trust document
corresponding to this Adoption Agreement.
. I certify that all applicable affiliates (i.e., all members of a
controlled group of corporations, commonly controlled group of
trades or businesses, or an affiliated service group) have adopted
this Plan.
. I understand that an Employer who has ever maintained or who later
adopts any plan (including a welfare benefit fund, as defined in
Section 419(e) of the Code, which provides post-retirement medical
benefits allocated to separate accounts for key employees, as
defined in Section 419A(d)(3) of The Code, or an individual medical
account, as defined in Section 415(l) (2) of the Code) in addition
to this Plan (other than a paired plan designated below) may not
rely on the opinion letter issued by the National Office of the
Internal Revenue Service as evidence that this Plan is qualified
under Section 401 of the Internal Revenue Code. If the Employer
who adopts or maintains multiple plans wishes to obtain reliance
that his or her plan(s) are qualified, application for a
determination letter should be made to the appropriate Key District
Director of Internal Revenue.
The Employer may not rely on the opinion letter issued by the
National Office of The Internal Revenue Service as evidence that
this Plan is qualified under Section 401 of The Code unless the
terms of the Plan, as herein adopted or amended, that pertain to
the requirements of Sections 401(a)(4), 401(a)(17), 401(1),
401(a)(5), 410(b) and 414(s) of The Code as amended by the Tax
Reform Act of 1986 or later laws, (a) are made effective
retroactively to the first day of the first Plan Year beginning
after December 31,1988 (or such other date on which these
requirements first become effective with respect to this Plan); or
(b) are made effective no later than the first day on which the
Employer is no longer entitled, under regulations, to rely on a
reasonable, good faith interpretation of these requirements, and
the prior provisions of the Plan constitute such an interpretation.
This Adoption Agreement may be used only in conjunction with Basic
Plan Document #03.
An Employer may rely on the National Office opinion letters if, in
addition to this Plan, it has only maintained the following paired
plans:
Basic Plan Document 03, Adoption Agreement 001, 002 or 008 (only
one)
Basic Plan Document 05, Adoption Agreement 001 or 003 (only one)
9
Signature of Employer /s/ Xxxxx XxXxxxx, Controller Date Signed: May 24, 1996
----------------------------- ------
Type or print name: XXXXX XXXXXXX Title: CONTROLLER OF KEVCO, INC.
------------- ------------------------
Adopting Employers may make inquiries at their local PaineWebber branch office
or at:
PaineWebber Incorporated
Business Retirement Plans
0000 Xxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
(000) 000-0000
PaineWebber will inform any adopting Employer of any amendments made to the Plan
or of the discontinuance or abandonment of the Plan, provided that the Employer
keeps PaineWebber informed of the Employer's current address.
10
PAINEWEBBER INCORPORATED
DEFINED CONTRIBUTION PLAN
PAINEWEBBER INCORPORATED
DEFINED CONTRIBUTION PLAN
Page
1. DEFINITIONS.....................................................................1
1.01 ADOPTION AGREEMENT.........................................................1
1.02 BASIC PLAN DOCUMENTS.......................................................1
1.03 BENEFICIARY................................................................1
1.04 BREAK IN ELIGIBILITY SERVICE...............................................1
1.05 BREAK IN VESTING SERVICE...................................................2
1.06 CODE.......................................................................2
1.07 COMPENSATION...............................................................2
1.08 DISABILITY.................................................................3
1.09 EARNED INCOME..............................................................4
1.10 EFFECTIVE DATE.............................................................4
1.11 ELIGIBILITY TESTING PERIOD.................................................4
1.12 EMPLOYEE...................................................................4
1.13 EMPLOYER...................................................................4
1.14 EMPLOYER CONTRIBUTION......................................................5
1.15 ENTRY DATES................................................................5
1.16 ERISA......................................................................5
1.17 FORFEITURE.................................................................5
1.18 FUND.......................................................................5
1.19 HIGHLY COMPENSATED EMPLOYEE................................................5
1.20 HOURS OF SERVICE...........................................................7
1.21 INDIVIDUAL ACCOUNT.........................................................9
1.22 INVESTMENT FUND............................................................9
1.23 KEY EMPLOYEE...............................................................9
1.24 LEASED EMPLOYEE............................................................9
1.25 NORMAL RETIREMENT AGE......................................................9
1.26 OWNER-EMPLOYEE.............................................................9
1.27 PARTICIPANT...............................................................10
1.28 PLAN......................................................................10
1.29 PLAN ADMINISTRATOR........................................................10
1.30 PLAN YEAR.................................................................10
1.31 PRIOR PLAN................................................................10
1.32 PROTOTYPE SPONSOR.........................................................10
1.33 SELF-EMPLOYED INDIVIDUAL..................................................10
1.34 SEPARATE FUND.............................................................10
1.35 TAXABLE WAGE BASE.........................................................11
1.36 TERMINATION OF EMPLOYMENT.................................................11
1.37 TOP-HEAVY PLAN............................................................11
1.38 TRUST AGREEMENT...........................................................11
1.39 TRUSTEE...................................................................11
1.40 VALUATION DATE............................................................11
1.41 VESTED....................................................................11
1.42 YEAR OF ELIGIBILITY SERVICE...............................................11
1.43 YEAR OF VESTING SERVICE...................................................12
2. ELIGIBILITY AND PARTICIPATION..................................................13
2.01 ELIGIBILITY TO PARTICIPATE................................................13
2.02 PLAN ENTRY................................................................13
2.03 TRANSFER TO OR FROM INELIGIBLE CLASS......................................14
2.04 RETURNING AFTER BREAK IN ELIGIBILITY SERVICE..............................14
3. CONTRIBUTIONS..................................................................16
3.01 EMPLOYER CONTRIBUTIONS....................................................16
3.02 EMPLOYEE CONTRIBUTIONS....................................................23
3.03 ROLLOVER CONTRIBUTIONS....................................................24
3.04 TRANSFER CONTRIBUTIONS....................................................24
3.05 LIMITATION ON ALLOCATIONS.................................................25
4. INDIVIDUAL ACCOUNTS AND VALUATION..............................................36
4.01 INDIVIDUAL ACCOUNTS.......................................................36
4.02 VALUATION OF FUND.........................................................36
4.03 VALUATION OF INDIVIDUAL ACCOUNTS..........................................36
4.04 SEGREGATION OF ASSETS.....................................................38
4.05 MODIFICATION OF METHOD FOR VALUING INDIVIDUAL ACCOUNTS....................38
5. TRUST FUND.....................................................................39
5.01 CREATION OF FUND..........................................................39
5.02 INVESTMENT AUTHORITY......................................................39
5.03 INDEMNIFICATION OF PROTOTYPE SPONSOR AND TRUSTEE..........................39
5.04 LIFE INSURANCE PURCHASES..................................................40
5.05 PARTICIPANTS' DIRECTION OF INVESTMENTS....................................41
6. VESTING AND DISTRIBUTION.......................................................43
6.01 DISTRIBUTION TO PARTICIPANT...............................................43
6.02 FORM OF DISTRIBUTION TO A PARTICIPANT.....................................49
6.03 DISTRIBUTIONS UPON THE DEATH OF A PARTICIPANT.............................52
6.04 FINANCIAL HARDSHIP WITHDRAWALS............................................54
6.05 FORM OF DISTRIBUTION TO BENEFICIARY.......................................55
6.06 JOINT AND SURVIVOR ANNUITY REQUIREMENTS...................................55
6.07 DISTRIBUTION REQUIREMENTS.................................................63
6.08 ANNUITY CONTRACTS.........................................................72
6.09 LOANS TO PARTICIPANTS.....................................................72
6.10 DIRECT ROLLOVERS..........................................................74
7. CLAIMS PROCEDURE...............................................................77
7.01 FILING A CLAIM FOR PLAN DISTRIBUTIONS.....................................77
7.02 DENIAL OF CLAIM...........................................................77
7.03 REQUEST FOR REVIEW........................................................77
8. PLAN ADMINISTRATOR.............................................................78
8.01 EMPLOYER IS THE PLAN ADMINISTRATOR........................................78
8.02 POWERS AND DUTIES OF THE PLAN ADMINISTRATOR...............................78
8.03 EXPENSES AND COMPENSATION.................................................80
8.04 INFORMATION FROM EMPLOYER.................................................80
9. AMENDMENT AND TERMINATION......................................................81
9.01 RIGHT OF PROTOTYPE SPONSOR TO AMEND THE PLAN..............................81
9.02 RIGHT OF EMPLOYER TO AMEND THE PLAN.......................................81
9.03 LIMITATION ON POWER TO AMEND..............................................82
9.04 AMENDMENT OF VESTING SCHEDULE.............................................82
9.05 PERMANENCY................................................................83
9.06 PLAN TERMINATION PROCEDURES...............................................83
9.07 PLAN CONTINUED BY SUCCESSOR EMPLOYER......................................83
9.08 FAILURE OF PLAN QUALIFICATION.............................................83
10. MISCELLANEOUS..................................................................85
10.01 STATE COMMUNITY PROPERTY LAWS............................................85
10.02 HEADINGS.................................................................85
10.03 GENDER AND NUMBER........................................................85
10.04 PLAN MERGER OR CONSOLIDATION.............................................85
10.05 TERMS OF EMPLOYMENT......................................................85
10.06 AGREEMENT BINDS HEIRS, ETC...............................................85
10.07 DETERMINATION OF TOP-HEAVY STATUS........................................86
10.08 SPECIAL LIMITATIONS FOR OWNER-EMPLOYEES..................................90
10.09 INALIENABILITY OF BENEFITS...............................................91
10.10 NO DUTIES OR RESPONSIBILITIES OF
PROTOTYPE SPONSOR........................................................91
10.11 GOVERNING LAW............................................................91
11. 401(k) PROVISIONS..............................................................92
11.01 DEFINITIONS..............................................................92
11.02 PARTICIPATION............................................................96
11.03 CONTRIBUTIONS............................................................98
11.04 NONDISCRIMINATION TESTING................................................99
11.05 DISTRIBUTION PROVISIONS.................................................105
11.06 VESTING.................................................................114
11.07 EFFECTIVE TIME..........................................................114
12. TARGET BENEFIT PROVISIONS.....................................................115
12.01 DEFINITIONS.............................................................115
12.02 EMPLOYER CONTRIBUTIONS..................................................118
12.03 EMPLOYEE CONTRIBUTIONS..................................................120
12.04 FORFEITURES.............................................................121
12.05 TABLES..................................................................121
Xxxxx Xxxxxx Incorporated
Qualified Retirement Plan
Defined Contribution Basic Plan Document 03
ARTICLE ONE-DEFINITIONS
Capitalized words and phrases in this Plan have the following
meanings unless the context clearly indicates otherwise:
1.01 ADOPTION AGREEMENT
The document executed by the Employer by which it adopts this Plan and
Trust and agrees to be bound by their terms and conditions.
1.02 BASIC PLAN DOCUMENTS
This Plan, together with the Trust Agreement.
1.03 BENEFICIARY
The person or entity designated by the Participant, subject to the
requirements of Section 6.06, to receive any death benefits payable under
the Plan on account of the death of the Participant. If no designation is
in effect on the date of the Participant's death or if no designated
Beneficiary is alive on that date, the Participant's Beneficiary will be
his or her estate.
1.04 BREAK IN ELIGIBILITY SERVICE
If Years of Eligibility Service have been selected in the Adoption
Agreement to be determined on the basis of an Employee's number of Hours
of Service, an Eligibility Testing Period in which an Employee does not
complete at least 501 Hours of Service (or any lesser number of Hours of
Service selected in the Adoption Agreement).
If Years of Eligibility Service have been selected in the Adoption
Agreement to be determined on the basis of an Employee's working for the
Employer for a 12 consecutive month period beginning on his or her
employment commencement date with the Employer, a 12-consecutive month
period commencing on the date of an Employee's interruption of his or her
employment with the Employer during which the Employee does not complete
at least 1 Hour of Service.
If selected in the Adoption Agreement, no Breaks in Service will be
considered under the Plan.
1.05 BREAK IN VESTING SERVICE
If Years of Vesting Service have been selected in the Adoption Agreement
to be determined on the basis of an Employee's number of Hours of
Service, a Plan Year during which an Employee does not complete at least
501 Hours of Service (or any lesser number of Hours of Service selected
in the Adoption Agreement).
If Years of Vesting Service have been selected in the Adoption Agreement
to be determined on the basis of an Employee's working for the Employer
for a 12 consecutive month period beginning on his or her employment
commencement date with the Employer, a 12-consecutive month period
commencing on the date of an Employee's interruption of his or her
employment with the Employer during which the Employee does not complete
at least 1 Hour of Service.
If selected in the Adoption Agreement, no Breaks in Service will be
considered under the Plan.
1.06 CODE
The Internal Revenue Code of 1986, including amendments.
1.07 COMPENSATION
Restated Plans - Plan Years Beginning Before January 1, 1989:
If this Plan is adopted as an amendment and restatement to bring a Prior
Plan into compliance with the Tax Reform Act of 1986, that Prior Plan's
definition of Compensation continues to apply for Plan Years beginning
before January 1, 1989:
Plan Years beginning on or after January 1, 1989:
Unless another definition of Compensation is selected in the Adoption
Agreement, Compensation means a Participant's W-2 earnings from his or
her Employer or, if the Participant is a Self-Employed individual, his or
her Earned Income. Alternative definitions of Compensation selected in
the Adoption Agreement may include "section 3401(a) wages" and "415 safe
harbor Compensation." "Section 3401(a) wages" means wages within the
meaning of Section 3401(a) of the Code for the purposes of income tax
withholding at the source but determined without regard to any rules that
limit the remuneration included in wages based on the nature or location
of the employment or the services performed. "415 safe harbor
Compensation" is defined under Section 3.05(E)(2) of the Plan. Unless
otherwise selected in the Adoption Agreement, Compensation also includes
any amount which is contributed by the Employer under a salary reduction
agreement and which is not includable in the Employee's gross income
under Sections 125, 402(e)(3), 402(h)(1)(B) or 403(b) of the Code.
Compensation only includes amounts actually paid to the Participant
during the Plan Year (or any other determination period selected in the
Adoption Agreement).
This Plan does not count any Participant's annual Compensation above
$200,000, as adjusted for increases in the cost-of-living by the federal
government under Section 401(a)(17) of the Code for any Plan Year (above
$150,000 for Plan Years beginning after 1993, as so adjusted), subject to
any "grandfather" rules that may be permitted under applicable law, which
are incorporated in this definition by reference). The cost-of-living
adjustment in effect for a calendar year applies to any Plan Year (or
determination period) beginning in that calendar year.
If a Plan Year (or determination period) consists of fewer than 12
months, the annual Compensation limit is the dollar amount described in
the preceding paragraph, multiplied by a fraction, the numerator of which
is the number of months in the Plan Year and the denominator of which is
12. In calculating this Compensation limit for a Participant, the rules
for treating certain family members as one person under Section 414(q)(6)
of the Code apply, except that the term "family" includes only the spouse
of the Participant and any lineal descendants of the Participant who do
not attain age 19 before the end of the year over which Compensation is
measured. If the adjusted $200,000 (or, after 1993, $150,000) limit is
exceeded, then (except for determining the portion of Compensation up to
the integration level under Section 3.01(B)(3)), the limit is apportioned
among the affected individuals in proportion to each individual's
Compensation determined under this Section 1.07 before application of
this limit.
Unless otherwise indicated in the Adoption Agreement, if an Employee
becomes a Participant on an Entry Date other than the first Entry Date in a
Plan Year, his or her Compensation includes all earnings paid to him or her
during the entire year over which Compensation is measured.
1.08 DISABILITY
The inability to engage in any substantial, gainful activity by
1
reason of any medically determinable physical or mental impairment that
can be expected to result in death or that has lasted or can be expected
to last for a continuous period of not less than 12 months. The
permanence and degree of the impairment must be supported by medical
evidence.
1.09 EARNED INCOME
The net earnings from self-employment in the trade or business with
respect to which the Plan is established, but excluding items not
included in gross income and the deductions allocable to those items. Net
earnings are also reduced by (i) the Participant's Employer contributions
to a qualified plan to the extent deductible under Section 404 of the
Code and (ii) the deduction allowed to the taxpayer under Section 164(f)
of the Code for taxable years beginning after December 31, 1989.
1.10 EFFECTIVE DATE
The date the Plan becomes effective as indicated on the Adoption
Agreement. However, if a different effective date is stated for a
particular Plan provision, that date applies to that provision.
1.11 ELIGIBILITY TESTING PERIOD
An Employee's first Eligibility Testing Period is the 12 consecutive-
month period beginning with the date the Employee first performs an Hour
of Service (that is, his or her employment commencement date). The
Employee's subsequent Eligibility Testing Periods are the 12 consecutive-
month periods beginning on the anniversaries of his or her employment
commencement date; but, if under the Adoption Agreement, an Employee is
required to complete one or fewer Years of Eligibility Service to become
a Participant, then his or her future Eligibility Testing Periods are the
Plan Years starting with the Plan Year beginning during the first
Eligibility Testing Period.
1.12 EMPLOYEE
Any person employed by the Employer or anyone else required to be
aggregated with the Employer under Sections 414(b), (c), (m) or (o) of
the Code, and any Leased Employee required to be treated as an Employee
under Sections 414(n) or (o) of the Code.
1.13 EMPLOYER
Any corporation, partnership, sole-proprietorship or other entity named
in the Adoption Agreement and any successor who by merger, consolidation,
purchase or otherwise assumes the obligations of the Plan. A partnership
is the Employer of each of its partners and a sole-proprietorship is the
Employer of its sole proprietor.
1.14 EMPLOYER CONTRIBUTION
The amount contributed to the Plan by the Employer for any Plan Year.
1.15 ENTRY DATES
The first day of the Plan Year and the first day of the seventh month of
the Plan Year (unless different dates are selected in the Adoption
Agreement).
1.16 ERISA
The Employee Retirement Income Security Act of 1974, including
amendments.
1.17 FORFEITURE
The portion of a Participant's Individual Account derived from Employer
Contributions in which he or she has not become Vested, as described in
Section 6.01(D).
1.18 FUND
The Plan assets held by the Trustee, in trust, for the Participants'
exclusive benefit.
1.19 HIGHLY COMPENSATED EMPLOYEE
Unless otherwise selected in the Adoption Agreement, the term Highly
Compensated Employee includes "highly compensated active employees" and
"highly compensated former employees."
Highly Compensated Active Employee: A "highly compensated active
employee" is any Employee who performs service for the Employer during
the Plan Year and who, during the previous year: (a) received
Compensation from the Employer in excess of $75,000 (as adjusted for
inflation under Section 415(d) of the Code); (b)received Compensation
from the Employer in excess of $50,000 (as adjusted for inflation under
Section 415(d) of the Code) and was a member of the top-paid group for
that year; or (c) was an officer of the Employer and received
Compensation during that year greater than 50% of the applicable dollar
limit under Section 415(b)(1)(A) of the Code. The term Highly Compensated
Employee also includes (i) Employees described in any of clauses (a), (b)
or (c) above during the current Plan Year, rather than the previous year,
but only if they are among the 100 Employees with the highest
Compensation for that Plan Year and (ii) Employees who are 5% Owners at
any time during the Plan Year or the previous year.
If no officer meets the Compensation requirement of clause (c) above
during the Plan Year or the previous year, the highest-paid officer for
that year is treated as a Highly Compensated Employee.
Highly Compensated Former Employee: A "highly compensated former
employee" is any former Employee who separated from service (or was
treated as if he or she had separated from service) before the Plan Year,
performed no service for the Employer during the Plan Year and was a
highly compensated active employee either for his or her separation year
or in any Plan Year ending on or after his or her 55th birthday.
The Plan Administrator may elect, in lieu of the foregoing method, to
make the previous year calculation for a Plan Year on the basis of the
calendar year ending with or within the applicable Plan Year (or, for a
Plan Year that is shorter than 12 months, the calendar year ending with
or within the 12-month period ending with the applicable Plan Year). This
determination is to be made in accordance with the procedure outlined in
Treasury Regulation Section 1.414(q)-1T, Q&A-14(b). If this method is
used and the Plan Year is the calendar year, then a separate calculation
for the previous year is not required. If this option is elected for any
plan of the Employer, it must apply to all of the Employer's plans.
If the "simplified/snapshot method" for determining Highly Compensated
Employees is selected in Adoption Agreement No. 005 or 006, a Highly
Compensated Employee includes any Employee who is employed by the
Employer on the snapshot day and who (a) was a 5% owner on the snapshot
day, (b)received Compensation for the Plan Year in excess of $75,000 (as
adjusted for inflation under Section 415(d) of the Code), (c) received
Compensation for the Plan Year in excess of $50,000 (as adjusted for
inflation under Section 415(d) of the Code) and was a member of the top-
paid group for that year, or (d) was an officer on the snapshot day and
received Compensation during the Plan Year that is greater than 50% of
the dollar limitation in effect under Section 415(b)(1)(A) of the Code.
If no officer satisfies the
2
Compensation requirement of (d) above, the highest paid officer for such
Plan Year shall be treated as a Highly Compensated Employee.
Under the "simplified/snapshot method," a Highly Compensated Employee
will also include any Employee who during the Plan Year: (a) terminated
employment prior to the snapshot day and was a Highly Compensated
Employee in the prior Plan Year; (b) terminated employment prior to the
snapshot day and (i) was a 5% owner or (ii) has Compensation for the Plan
Year which is greater than or equal to the Compensation of any Employee
who is treated as a Highly Compensated Employee on the snapshot day
(except for Employees who are Highly Compensated Employees solely because
they are 5% owners or officers), or (iii) was an officer and has
Compensation greater than or equal to the Compensation of any other
officer who is a Highly Compensated Employee on the snapshot day solely
because that person is an officer; or (c) becomes employed subsequent to
the snapshot day during the Plan year and (i) is a 5% owner, or (ii) has
Compensation for the Plan Year which is greater than or equal to the
Compensation of any Employee who is treated as a Highly Compensated
Employee on the snapshot day (except for Employees who are Highly
Compensated Employees solely because they are 5% owners or officers), or
(iii) is an officer and has Compensation greater than or equal to the
Compensation of any other officer who is a Highly Compensated Employee on
the snapshot day solely because that person is an officer.
If the "simplified method" for determining Highly Compensated Employees
is selected in Adoption Agreement No. 005 or 006, a Highly Compensated
Employee includes any Employee who during the Plan Year performs services
for the Employer and who (a) was a 5% owner, (b)received Compensation for
the Plan Year in excess of $75,000 (as adjusted for inflation under
Section 415(d) of the Code), (c) received Compensation for the Plan Year
in excess of $50,000 (as adjusted for inflation under Section 415(d) of
the Code) and was a member of the top paid group for that year, or (d)
was an officer and received Compensation during the Plan Year that is
greater than 50% of the dollar limitation in effect under Section
415(b)(1)(A) of the Code. If no officer satisfies the Compensation
requirement of (d) above, the highest paid officer for such Plan Year
shall be treated as a Highly Compensated Employee.
Under any method of determining Highly Compensated Employees, if an
Employee is a family member of either (i) a 5% Owner who is an active or
former Employee or (ii) a Highly Compensated Employee who is one of the
10 most Highly Compensated Employees (on the basis of Employer
Compensation paid during that year), then the family member and the 5%
Owner or top 10 Highly Compensated Employee are treated as if they were a
single Employee receiving Compensation and Plan contributions or benefits
equal to the sum of such Compensation and contributions or benefits of
the family member and the 5% Owner or top 10 Highly Compensated Employee.
For this purpose, family members are the spouse, lineal ascendants and
descendants of the Employee or former Employee and the spouses of those
ascendants and descendants. The determination of who is a Highly
Compensated Employee, including the determinations of the number and
identity of Employees in the top-paid group, the top 100 Employees, the
number of Employees treated as officers and the Compensation that is
considered, are made in accordance with Section 414(q) of the Code and
applicable Treasury Regulations to the extent they are not inconsistent
with the methods described above.
1.20 HOURS OF SERVICE
A. Each hour for which an Employee is paid, or entitled to payment,
for the performance of duties for the Employer. These hours are
credited to the Employee for the Eligibility Testing Period or
Plan Year, as applicable, in which the duties are performed;
B. Each hour for which an Employee is paid, or entitled to payment,
by the Employer for an Eligibility Testing Period or Plan Year,
as applicable, during which no duties are performed (regardless
of whether his or her employment terminated) due to vacation,
holiday, illness, incapacity (including Disability), layoff, jury
duty, military duty or leave of absence. No more than 501 Hours
of Service will be credited under this paragraph for any single
continuous period (whether or not that period occurs in a single
Eligibility Testing Period or Plan Year, as applicable). Hours
under this paragraph will be calculated and credited as required
under Department of Labor Regulation Section 2530.200b-2, which
Section is incorporated in this paragraph by this reference; and
C. Each hour for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by the Employer. The same
Hours of Service will not be credited both under paragraph (A) or
paragraph (B), as the case may be, and under this paragraph (C).
These hours are credited to the Employee for the Eligibility
Testing Period or Plan Year, as applicable, to which the award or
agreement pertains, rather than the Eligibility Testing Period or
Plan Year, as applicable, in which the award, agreement, or
payment is made.
D. In determining whether a Break in Eligibility Service or a Break
in Vesting Service has occurred in an Eligibility Testing Period
or Plan Year, as applicable, an Employee who is absent from work
for maternity or paternity reasons will receive credit for the
Hours of Service that would otherwise have been credited to him
or her, if not for that absence, or if those hours cannot be
determined, 8 Hours of Service per day of that absence, in either
case, up to a maximum of 501 Hours of Service. An absence from
work for maternity or paternity reasons means an absence (1) by
reason of the pregnancy of the Employee, (2) by reason of the
birth of a child of the Employee, (3) by reason of the placement
of a child with the Employee in connection with the Employee's
adoption of the child, or (4) for purposes of caring for that
child for a period beginning immediately following the child's
birth or placement. The Hours of Service credited under this
paragraph will be credited to the Eligibility Testing Period or
Plan Year in which the absence begins, if the crediting is
necessary to prevent a Break in Eligibility Service or a Break in
Vesting Service in the applicable Eligibility Testing Period or
Plan Year, or in all other cases, in the following Eligibility
Testing Period or Plan Year.
E. Hours of Service will be credited for employment with other
members of an affiliated service group (under Section 414(m) of
the Code), a controlled group of corporations (under Section
414(b) of the Code), or a group of trades or businesses under
common control (under Section 414(c) of the Code) of which the
Employer is a member, and any other entity required to be
aggregated with the Employer under Section 414(o) of the Code and
its applicable Treasury Regulations.
3
Hours of Service will also be credited for any individual
considered an Employee under Sections 414(n) or 414(o) of the
Code and any applicable Treasury Regulations.
F. If an Employer maintains the plan of a predecessor employer,
service for that predecessor employer is treated as service for
the Employer; to the extent selected in the Adoption Agreement.
G. Service will be determined on the basis of the method selected in
the Adoption Agreement.
1.21 INDIVIDUAL ACCOUNT
The bookkeeping account established and maintained under this Plan for
each Participant under Section 4.01.
1.22 INVESTMENT FUND
A subdivision of the Fund established under the Trust Agreement.
1.23 KEY EMPLOYEE
Any person who is a Key Employee under Section 10.07(B).
1.24 LEASED EMPLOYEE
Any person (other than an employee of an Employer) who performed services
for the Employer (or for the Employer and related persons, determined in
accordance with Section 414(n)(6) of the Code) under an agreement between
the Employer and any other person (the "leasing organization") on a
substantially full time basis for a period of at least one year, if those
services are of a type historically performed by employees in the
business field of the Employer. Contributions or benefits provided to a
Leased Employee by the leasing organization which are attributable to
services performed for the Employer are treated as provided by the
Employer.
A Leased Employee is not considered an Employee of the Employer if: (1)
the Leased Employee is covered by a money purchase pension plan
providing: (a) a nonintegrated employer contribution rate of at least 10%
of "compensation," as defined in Section 415(c)(3) of the Code, but
including amounts contributed under a salary reduction agreement which
are excludible from the Leased Employee's gross income under Section 125,
Section 402(e)(3), Section 402(h)(1)(B) or Section 403(b) of the Code,
(b) immediate participation and (c) full and immediate vesting; and (2)
Leased Employees do not constitute more than 20% of the Employer's non-
highly compensated work force.
1.25 NORMAL RETIREMENT AGE
The age selected in the Adoption Agreement, but if none is selected, age
65.
1.26 OWNER-EMPLOYEE
An individual who is a sole proprietor, or who is a partner owning more
than 10% of either the capital or profits interest of the partnership.
1.27 PARTICIPANT
Any Employee or former Employee of the Employer who has met the Plan's
eligibility requirements, has entered the Plan and who is or may become
eligible to receive a benefit of any type from this Plan or whose
Beneficiary may be eligible to receive any Plan benefit. As of the date
an individual's benefits under the Plan have been fully distributed, that
individual will cease to be a Participant.
A Participant is treated as benefiting under the Plan for any Plan Year
during which the Participant received or is deemed to receive an allocation
in accordance with Treasury Regulation Section 1.410(b)-3(a).
1.28 PLAN
The prototype defined contribution plan adopted by the Employer. The Plan
consists of the Basic Plan Documents plus the corresponding Adoption
Agreement as completed and signed by the Employer.
1.29 PLAN ADMINISTRATOR
The person or persons described in Section 8.01.
1.30 PLAN YEAR
The Employer's fiscal year or any other 12 consecutive-month period
selected in the Adoption Agreement.
1.31 PRIOR PLAN
A plan which was amended or replaced by adoption of this Plan document,
as indicated in the Adoption Agreement.
1.32 PROTOTYPE SPONSOR
PaineWebber Incorporated, a Delaware corporation, and any successor
corporation by merger, consolidation or liquidation, as well as any other
entity to which PaineWebber Incorporated has transferred all or a
substantial portion of its retail brokerage business. Each Prototype
Sponsor must meet the definition of a sponsoring organization set forth
in Section 3.07 of Revenue Procedure 89-9 or any future definition
required by the Internal Revenue Service.
1.33 SELF-EMPLOYED INDIVIDUAL
An individual who has Earned Income for the taxable year from the trade
or business for which the Plan is established (and an individual who
would have had Earned Income but for the fact that the trade or business
had no net profits for the taxable year).
1.34 SEPARATE FUND
A subdivision of the Fund held in the name of a particular Participant
representing certain assets held for that Participant. The assets which
comprise a Participant's Separate Fund are those assets earmarked for him
and those assets subject to the Participant's individual direction under
the terms of the Trust Agreement and Article 5.
1.35 TAXABLE WAGE BASE
The contribution and benefit base in effect under Section
230 of the Social Security Act at the beginning of the Plan Year.
1.36 TERMINATION OF EMPLOYMENT
An individual ceases to be an Employee of an Employer for any reason
other than his or her death. An Employee who does not return to work for
the Employer before the expiration of an authorized leave of absence
incurs a Termination of Employment when that leave ends.
1.37 TOP-HEAVY PLAN
The determination of whether this Plan is a TOP-Heavy Plan for any Plan
Year is made under Section 10.07.
1.38 TRUST AGREEMENT
The PaineWebber Standard Form Trust Agreement.
1.39 TRUSTEE
An individual, individuals or corporation named in the Adoption Agreement
as Trustee or any successor under the terms of the Trust Agreement.
1.40 VALUATION DATE
The last day of the Plan Year and each other date selected by the Plan
Administrator, in a uniform and nondiscriminatory manner, for determining
the fair market value of the Fund's assets.
4
1.41 VESTED
Nonforfeitable; an interest that is unconditional and legally enforceable
against the Plan in all or a portion of an immediate or deferred Plan
benefit which arises from completion of Years of Vesting Service or the
other events described in Section 6.01(B).
1.42 YEAR OF ELIGIBILITY SERVICE
If Years of Eligibility Service have been selected in the Adoption
Agreement to be determined on the basis of an Employee's number of Hours
of Service, an Eligibility Testing Period during which an Employee
completes at least 1,000 Hours of Service (or a lesser number of Hours of
Service selected in the Adoption Agreement).
If Years of Eligibility Service have been selected in the Adoption
Agreement to be determined on the basis of an Employee's working for the
Employer for a 12 consecutive-month period beginning on his or her
employment or reemployment commencement date with the Employer, each 12
consecutive-month period of employment for the Employer (or faction
thereof) during which the Employee does not have a Break in Eligibility
Service. An Employee's employment or reemployment commencement date is
the first day the Employee performs an Hour of Service. Fractional
periods of a year will be expressed in terms of days.
Years of Eligibility Service (1) include certain specified periods of
service with predecessor employers and (2) do not include excluded
periods of time, in each case, as selected in the Adoption Agreement. If
the Employer is maintaining this Plan as a plan of a predecessor employer
(as defined in Section 411 of the Code), Years of Eligibility Service
include periods of service with that predecessor employer.
If the period of eligibility service selected in the Adoption Agreement
is or includes a fractional year, an Employee will not be required to
complete any specified number of Hours of Service to receive credit for
such fractional year.
1.43 YEAR OF VESTING SERVICE
If Years of Vesting Service have been selected in the Adoption Agreement
to be determined on the basis of an Employee's number of Hours of
Service, a Plan Year during which an Employee completes at least 1,000
Hours of Service (or a lesser number of Hours of Service selected in the
Adoption Agreement).
If Years of Vesting Service have been selected in the Adoption Agreement
to be determined on the basis of an Employee's working for the Employer
for a each 12 consecutive-month period beginning on his or her employment
or reemployment commencement date with the Employer, 12 consecutive-month
period of employment for the Employer (or fraction thereof) during which
the Employee does not have a Break in Vesting Service. An Employee's
employment or reemployment commencement date is the first day the
Employee performs an Hour of Service. Fractional periods of a year will
be expressed in terms of days.
Years of Vesting Service (1) include certain specified periods of service
with predecessor employers and (2) do not include excluded periods of time,
in each case, as selected in the Adoption Agreement. If the Employer is
maintaining this Plan as a plan of a predecessor employer (as defined in
Section 411 of the Code), Years of Vesting Service include periods of
service with that predecessor employer.
5
ARTICLE TWO--ELIGIBILITY AND
PARTICIPATION
2.01 ELIGIBILITY TO PARTICIPATE
All Employees of the Employer, except those excluded from participation
under the Adoption Agreement, are eligible to participate in this Plan
after satisfying the age and Years of Eligibility Service requirements
selected in the Adoption Agreement. Union Employees and Nonresident
Aliens are excluded from Plan participation, unless otherwise selected in
the Adoption Agreement.
As used in the Adoption Agreement, the terms "Union Employees" and Non-
resident Aliens" refer to the following:
Union Employees: Employees included in a unit of Employees covered by a
collective bargaining agreement between the Employer and Employee
representatives, if retirement benefits were the subject of good faith
bargaining and if two percent or less of the Employees who are covered
pursuant to that agreement are professionals as defined in Treasury
Regulation Section 1.410(b)-9. For this purpose, the term "employee
representatives" does not include any organization more than half of
whose members are Employees who are owners, officers, or executives of
the Employer.
Nonresident Aliens: Employees who are nonresident aliens (within the
meaning of Section 7701(b)(1)(B) of the Code) and who receive no earned
income (within the meaning of Section 911(d)(2) of the Code) from the
Employer which constitutes income from sources within the United States
(within the meaning of Section 861(a)(3) of the Code).
2.02 PLAN ENTRY
A. If this Plan replaces a Prior Plan, each Employee of the Employer
who participated in the Prior Plan on the day immediately before
the Effective Date continues to be a Participant in this Plan.
B. An Employee becomes a Participant as of the Effective Date if he
or she has met the requirements of Section 2.01 as of that Date.
After the Effective Date, each Employee becomes a Participant on
the first Entry Date after satisfying the eligibility
requirements of Section 2.01.
C. The Plan Administrator must notify each Employee who becomes
eligible to become a Participant under this Plan and furnish him
or her with whatever enrollment forms, other documents are
required of Participants and furnish him or her with whatever
notices and documents are required by applicable law to be
provided to eligible Employees and/or Participants, including but
not limited to summary plan descriptions. Prior to becoming a
Participant, the eligible Employee must execute those forms or
documents and make available whatever information is reasonably
required for the administration of the Plan, including his or her
investment elections pursuant to Section 5.05, if applicable. If
this is a "standardized plan," and the Employee does not provide
the required information, the Employer shall provide the
necessary information from its best available records.
2.03 TRANSFER TO OR FROM INELIGIBLE CLASS
A Participant who becomes ineligible to partIcipate in this Plan because
he or she is no longer a member of an eligible class of Employees,
participates immediately upon his or her return to an eligible class of
Employees if he or she has not had a Break in Eligibility Service. If the
Employee had a Break in Eligibility Service, his or her eligibility to
participate is determined under Section 2.04.
An Employee who is not a member of the eligible class of Employees
becomes a Participant on becoming a member of the eligible class, if the
Employee has satisfied the age and Years of Eligibility Service
requirements. If the Employee has not satisfied the age and Years of
Eligibility Service requirements as of the date he or she becomes a
member of the eligible class, he or she becomes a Participant on the
first Entry Date after satisfying those requirements.
2.04 RETURNING AFTER BREAK IN ELIGIBILITY SERVICE
A. Before Becoming Eligible - If an Employee has a Break in
Eligibility Service before he or she meets the Plan's eligibility
requirements, his or her Years of Eligibility Service before the
Break in Eligibility Service will not count under the Plan. This
paragraph applies only if the Employee is 100% Vested upon
meeting the eligibility requirements.
B. Before Becoming Vested - If a Participant has a Break in
Eligibility Service at a time when he or she is not at least
partially Vested in the portion of his or her Individual Account
derived from Employer Contributions, his or her Years of
Eligibility Service before a period of consecutive Breaks in
Eligibility Service will not count for eligibility purposes if
the number of consecutive Breaks in Eligibility Service in that
period equals or exceeds the greater of 5 or the aggregate number
of Years of Eligibility Service before that Break. The aggregate
number of Years of Eligibility Service does not include any Years
of Eligibility Service that are not counted under the preceding
sentence because of earlier Breaks.
If a Participant's Years of Eligibility Service are not counted
under the Plan because of the previous paragraph, he or she is
treated as a new Employee for eligibility purposes.
C. After Becoming Vested - A Participant who has a Break in
Eligibility Service after having a Vested interest in at least
part of his or her Individual Account derived from Employer
Contributions continues to participate in the Plan, or, if he or
she is not employed by the Employer, participates when reemployed
by the Employer.
6
ARTICLE THREE--CONTRIBUTIONS
3.01 EMPLOYER CONTRIBUTIONS
A. Obligation to Contribute - The Employer makes contributions to
the Plan according to the contribution formula selected in the
Adoption Agreement. If this Plan is a profit-sharing plan, the
amount of the Employer Contribution is determined in the
Employer's sole discretion, and the Employer, in its sole
discretion, may make contributions whether or not it has current
or accumulated earnings or profits (unless otherwise provided in
the Adoption Agreement). Neither the Trustee nor the Prototype
Sponsor has any duty to question the correctness of a
contribution, or to collect any amount that the Employer fails to
pay.
B. Allocation Formula and the Right to Share in the Employer
Contribution -
1. General - The Employer Contribution for a Plan Year is
allocated to the Individual Accounts of qualifying
Participants according to the formula selected in the
Adoption Agreement. The Employer Contribution for any
Plan Year is allocated to each Participant's Individual
Account as of the last day of that Plan Year.
2. Qualifying Participants - A Participant is a qualifying
Participant and is entitled to share in the Employer
Contribution for any Plan Year (a) if he or she was a
Participant on at least 1 day during the Plan Year,
(b)if selected in the Adoption Agreement, and only if
the Plan is "nonstandardized" (that is, Adoption
Agreement No. 003, 004, 006 or 007 was used by the
Employer to adopt the Plan), he or she completes the
required number of Hours of Service specified in the
Adoption Agreement during the Plan Year and (c) if
selected in the Adoption Agreement, he or she is an
Employee on the last day of the Plan Year (unless the
exception for the Participant's death, Disability or
Termination of Employment after attaining Normal
Retirement Age has been selected in the Adoption
Agreement). The determination of whether a Participant
is entitled to share in the Employer Contribution is
made as of the last day of each Plan Year.
3. Special Rules for Integrated Plans - If the Employer
selected an integrated contribution or allocation
formula in the Adoption Agreement, then the amount by
which the "Excess Contribution Percentage" exceeds the
"Base Contribution Percentage" cannot be larger than the
maximum disparity rate under the following table
(depending on the type of plan):
As used above:
(a) The "Excess Contribution Percentage" is the
percentage of Compensation which is contributed
under the Plan for the portion of each
Participant's Compensation which is greater than
the Integration Level selected in the Adoption
Agreement.
(b) The "Base Contribution Percentage" is the
percentage of Compensation contributed under the
Plan for the portion of each Participant's
Compensation which is not greater than the
Integration Level selected in the Adoption
Agreement.
(c) The "Integration Level" is the Taxable Wage Base
or a lesser amount selected in the Adoption
Agreement. The Integration Level cannot be
greater than the contribution and benefit base in
effect under Section 230 of the Social Security
Act for the Plan Year.
The Employer Contributions and Forfeitures are
allocated to Participants' Individual Accounts in four
(4) steps as follows (only Steps 3 and 4 are required
if the Plan is not a Top-Heavy Plan):
Step 1 Employer Contributions and Forfeitures are
allocated, up to the first 3% of each qualifying
Participant's Compensation, based on the ratio
that his or her Compensation for the Plan Year
bears to the total Compensation of all qualifying
Participants for the Plan Year.
Step 2 Any remaining Employer Contributions and
Forfeitures are then allocated, up to 3% of each
qualifying Participant's Compensation, based on
the ratio that his or her Excess Compensation for
the Plan Year bears to all qualifying
Participants' Excess Compensation. For purposes of
this Step 2, in the case of any Participant who
has exceeded the "cumulative permitted disparity
limit" described below, that Participant's total
Compensation for the Plan Year will be taken into
account.
Step 3 Employer Contributions and Forfeitures
remaining after Step 2 (or, in the case of a non-
Top-Heavy Plan, all Employer Contributions and
Forfeitures) are allocated to each qualifying
Participant, based on the ratio that the sum of
that Participant's Compensation and Excess
Compensation for the Plan Year bears to the sum of
all qualifying Participants' Compensation and
Excess Compensation for the Plan Year. For
________________________________________________________________________________
MAXIMUM DISPARITY RATE
----------------------
Standardized and Nonstandardized
Top-Heavy and Non-Top-
Nonstandardized Heavy
Integration Level Money Purchase Profit-Sharing Profit-Sharing
Taxable Wage Base (TWB) 5.7% 2.7% 5.7%
More than $50 but not more than 20% of TWB/*/ 5.7% 2.7% 5.7%
More than 20% of TWB/*/ but not more than 80% of TWB 4.3% 1.3% 4.3%
More than 80% of TWB but not more than TWB 5.4% 2.4% 5.4%
* If 20% of TWB is less than $10,000, substitute $10,000 for "20% of TWB."
7
purposes of this Step 3, in the case of any Participant
who has exceeded the "cumulative permitted disparity
limit" described below, 200% of such Participant's
total Compensation for the Plan Year will be taken into
account.
Step 4 Employer Contributions and Forfeitures remaining
after Step 3 are allocated as described in Step 1,
without the 3% Compensation limit.
Overall Permitted Disparity Limits:
Annual Overall Permitted Disparity Limit - Notwithstanding the
preceding paragraphs, for any Plan Year for which this Plan benefits
any Participant who benefits under another qualified plan or
simplified employee pension (as defined in Section 408(k) of the
Code), maintained by the Employer and which provides for permitted
disparity (or imputes disparity), Employer Contributions and
Forfeitures will be allocated to the Individual Account of each
Participant who either completes more than 500 Hours of Service
during the Plan Year or who is employed on the last day of the Plan
Year in the ratio of that Participant's total Compensation to the
total Compensation of all Participants.
Cumulative Permitted Disparity Limit - Effective for Plan Years
beginning on or after January 1, 1995, the cumulative permitted
disparity limit for a Participant is 35 "total cumulative permitted
disparity years." "Total cumulative permitted disparity years" means
the number of years credited to the Participant for allocation or
accrual purposes under this Plan, any other qualified plan or
simplified employee pension plan (whether or not terminated) ever
maintained by the Employer. For purposes of determining the
Participant's cumulative permitted disparity limit, all Plan Years
ending in the same calendar year are treated as the same Plan Year.
If the Participant has not received, and not been deemed to have
received, an allocation (In accordance with Treasury Regulation
Section 1.410(b)-3(a)) under a defined benefit plan or target benefit
plan for any Plan Year beginning on or after January 1, 1994, the
Participant has no cumulative permitted disparity limit.
C. Allocation of Forfeitures - Forfeitures for a Plan Year that
arise as a result of the application of Section 6.01(D) are
allocated as follows:
Forfeitures reduce Employer Contributions to the Plan, unless
otherwise provided in the Adoption Agreement. However, if it is
provided in the Adoption Agreement that Forfeitures are allocated to
the Individual Accounts of Participants, then Forfeitures are
allocated as if they were Employer Contributions under Section 3.01
(B) to the Individual Accounts of Participants who are entitled to
share in the Employer Contributions for that Plan Year.
D. Timing of Employer Contribution - The Employer Contribution for
each Plan Year must be delivered to the Trustee by the due date
including extensions, for filing the Employer's income tax return
for its fiscal year in which the Plan Year ends.
E. Minimum Allocation for Top-Heavy Plans - The contribution and
allocation provisions of this Section 3.01(E) apply in any Plan
Year in which this Plan is a Top-Heavy Plan.
1. Except as otherwise provided in (2) below, the Employer
Contributions and Forfeitures allocated on behalf of any
Participant who is not a Key Employee shall not be less than
the lesser of (a) 3% of such Participant's Compensation or
(b) the largest percentage of Employer Contributions and
Forfeitures, as a percentage of Key Employee's Compensation,
as limited by Section 401(a)(17) of the Code, allocated on
behalf of any Key Employee for that year. Subsection (b)
shall not apply if the Employer has a defined benefit plan
which it uses to satisfy the requirements of Section
401(a)(4) or 410 of the Code. The minimum allocation is
determined without regard to any Social Security
contribution. The minimum allocation shall be made even
though, under other Plan provisions, the Participant would
not otherwise be entitled to receive an allocation, or would
have received a lesser allocation for the year because of
(a) the Participant's failure to complete 1,000 Hours of
Service (or any equivalent provided in the Plan), or (b) the
Participant's failure to make mandatory Employee
contributions to the Plan, or (c) the Participant's
Compensation is less than a stated amount.
2. The provision in (1) above does not apply to any Participant
(a) who was not employed by the Employer on the last day of
the Plan Year or (b) to the extent the Participant is
covered under any other plan or plans of the Employer and
the Employer has provided in the Adoption Agreement that the
minimum allocation or benefit requirement applicable to Top-
Heavy Plans will be met under the other plan or plans.
3. The minimum allocation required under this Section 3.01(E)
and Section 3.01(F)(1) (to the extent required to be
nonforfeitable under Section 416(b) of the Code) is
not forfeitable under Section 411(a)(3)(B) or 411(a)(3)(D)
of the Code.
4. For purposes of computing the minimum allocation,
Compensation shall mean the definition of Compensation
selected in the Adoption Agreement as limited by Section
401(a)(17) of the Code.
F. Special Requirements for Paired Plans - The Employer maintains
paired plans if the Employer has adopted either a combination of
two defined contribution standardized plans or a combination of one
or two defined contribution standardized plans and one defined
benefit standardized plan.
1. Paired Plans - Paired plans may be maintained by the
Employer only under one of the following circumstances:
(a) When the paired plans are Top-Heavy, the Top-Heavy
minimum contribution is provided in all paired plans;
or
(b) Each Paired plan benefits the same Participants.
2. Minimum Allocation Under 3.01(F)(1)(b) - In the case of
Section 3.01(F)(1)(b) above, when the paired plans are Top-
Heavy, the Employer is required to provide a minimum
contribution equal to 3% of Compensation for each non-Key
Employee who is entitled to a minimum contribution. That
minimum contribution will only be made under one of the
plans. If an Employee is a Participant in only one of the
plans, the mini-
8
mum contribution is made to that plan. If the Employee is a
Participant in both plans, the minimum contribution is made
to the money purchase pension plan.
3. Only One Plan can be Integrated - If the Employer maintains
paired plans, only one of the plans may utilize the
disparity in contributions or benefits permitted under
Section 401(1) of the Code. If both Adoption Agreements
provide for integration, permitted disparity is allowed only
(i) under the other plan if it is a defined contribution
plan or (ii) under this Plan if the other plan is a defined
benefit plan.
G. Return of Employer Contribution to the Employer Under Special
Circumstances - If the Employer makes a contribution by reason of
a mistake of fact, the Employer is entitled to recover that
contribution provided that the recovery occurs within 1 year of
the date on which the contribution was made.
If the Commissioner of Internal Revenue determines that the Plan
is not initially qualified under the Code, any contributions that
were conditioned on the initial qualification of the Plan may be
returned to the Employer provided that those contributions must
be returned to the Employer within 1 year after the date on which
the initial qualification is denied.
If a contribution made by the Employer is conditioned on its
deductibility under Section 404 of the Code and the deduction is
fully or partially disallowed, the contribution may be returned
to the Employer, to the extent of the amount disallowed, provided
that it is returned to the Employer within 1 year of the date on
which the deduction is disallowed. All Employer Contributions are
declared to be conditioned on their deductibility.
3.02 EMPLOYEE CONTRIBUTIONS
Except as provided under Section 11.03(D), if applicable, this Plan does
not accept nondeductible Employee contributions for Plan Years beginning
after the Plan Year in which this Plan is adopted by the Employer.
Nondeductible Employee contributions (and any related matching
contributions) made by a Participant before they were not accepted under
this Plan are maintained in a fully Vested sub-account under that
Participant's Individual Account. If and as selected in the Adoption
Agreement, a Participant may, upon a written request submitted to the
Plan Administrator and subject to the requirements of Section 6.06 (if
applicable), withdraw any part of his or her nondeductible Employee
contribution sub-account; in all other respects, a Participant's
nondeductible Employee contribution sub-account is subject to the Plan's
regular distribution provisions.
This Plan does not accept deductible Employee contributions made for a
taxable year beginning after December 31, 1986. Deductible Employee
contributions made by a Participant before that date are maintained in a
fully Vested sub-account under that Participant's Individual Account. No
part of the deductible Employee contribution sub-account may be used to
purchase life insurance. If and as selected in the Adoption Agreement, a
Participant may, upon a written request submitted to the Plan
Administrator and subject to the requirements of Section 6.06 (if
applicable), withdraw any part of his or her deductible Employee
contribution sub-account; in all other respects, a Participant's
deductible Employee contribution sub-account is subject to the Plan's
regular distribution provisions.
Employee contributions for Plan Years beginning after December 31, 1986,
together with any matching contributions (as defined in Section 401(m) of
the Code), are limited to meet the nondiscrimination test of Section
401(m) of the Code.
No Forfeiture occurs as a result of an a Participant's withdrawal of
Employee contributions.
3.03 ROLLOVER CONTRIBUTIONS
If this option is selected in the Adoption Agreement, and if permitted by
the Plan Administrator on a uniform and nondiscriminatory basis, a
Participant or an Employee who is eligible to participate in the Plan or
who is in an eligible class of Employees who, upon satisfaction of any
applicable age and/or service requirements, will become eligible to
participate in the Plan, may contribute a "rollover contribution" (as
defined below) to the Plan, but only if the Employee submits a written
certification satisfactory to the Plan Administrator, that the
contribution qualifies as a rollover contribution.
A Participant's rollover contributions are maintained in a fully Vested
sub-account under the Participant's Individual Account. If and as
selected in the Adoption Agreement, a Participant may, upon a written
request submitted to the Plan Administrator and subject to the
requirements of Section 6.06 (if applicable), withdraw any part of his or
her rollover contribution sub-account; in all other respects, a
Participant's rollover contribution sub-account is subject to the Plan's
regular distribution provisions.
For purposes of this Section 3.03, a "rollover contribution" is a
contribution described in Section 402(c)(4), 403(a)(4) or 408(d)(3) of
the Code or in any other provision that may be added to the Code
authorizing rollovers to qualified plans.
3.04 TRANSFER CONTRIBUTIONS
If this option is selected in the Adoption Agreement, and if permitted by
the Plan Administrator on a uniform and nondiscriminatory basis, the
Trustee may receive any amounts transferred to it from the trustee of
another plan qualified under Section 401(a) of the Code on behalf of any
Participant or Employee who is eligible to participate in the Plan or who
is in the class of Employees who, upon satisfaction of any applicable age
and/or service requirements, will become eligible to participate in the
Plan. A Participant's transfer contributions are maintained in a fully
Vested sub-account under the Participant's Individual Account. If and as
selected in the Adoption Agreement, a Participant may, upon a written
request submitted to the Plan Administrator and subject to the
requirements of Section 6.06 (if applicable), withdraw any part of his or
her transfer contribution sub-account; in all other respects, a
Participant's transfer contribution sub-account is subject to the Plan's
regular distribution provisions.
3.05 LIMITATION ON ALLOCATIONS
A. No Other Plan - If the Participant has never participated in another
qualified plan, "welfare benefit fund" (as defined in Section 419(e)
of the Code), "individual medical account" (as defined in Section
415(l)(2) of the Code) or "simplified employee pension" (as defined in
Section 408(k) of the Code), maintained by the Employer and which
provided an "Annual Addition" (as defined in Section 3.05(E)(1)), the
following rules apply:
1. The amount of Annual Additions credited to the Participant's
Individual Account for any "Limitation Year" (as defined in
Section 3.05(E)(9)) cannot exceed the lesser of the
"Maximum Permissible Amount" (as defined in
9
Section 3.05(E)(11)) or any other limitation contained in
this Plan. Employer Contributions contributed or allocated
to a Participant's Individual Account must be reduced, if
necessary, so that the Annual Additions for the Limitation
Year do not exceed the Maximum Permissible Amount.
2. Before determining the Participant's actual "Compensation"
(as defined in Section 3.05(E)(2)) for the Limitation Year,
the Employer may determine the Maximum Permissible Amount
for a Participant on the basis of a reasonable estimate of
the Participant's Compensation for the Limitation Year,
uniformly determined for all similarly situated
Participants.
3. Then, as soon as is administratively feasible after the end
of the Limitation Year, the Maximum Permissible Amount for
the Limitation Year is determined based on the Participant's
actual Compensation for the Limitation Year.
4. If under Section 3.05(A)(3) or as a result of the allocation
of Forfeitures, there is an "Excess Amount" (as defined in
Section 3.05(E)(7)), the Excess Amount is eliminated as
follows:
(a) Any nondeductible voluntary Employee contributions, to
the extent they would reduce the Excess Amount, are
returned to the Participant;
(b) If an Excess Amount still exists after (a), and the
Participant is covered by the Plan at the end of the
Limitation Year, the Excess Amount in the Participant's
Individual Account is used to reduce Employer
Contributions (including any allocation of Forfeitures)
for that Participant in the next Limitation Year, and
each future Limitation Year if necessary.
(c) If an Excess Amount still exists after application of
paragraph (a) and the Participant is not covered by the
Plan at the end of a Limitation Year, the Excess Amount
is held unlocated in a suspense account. The suspense
account is applied to reduce future Employer
Contributions (including allocation of any Forfeitures)
for all other Participants in the next Limitation Year,
and each succeeding Limitation Year if necessary.
(d) If a suspense account exists under this Section 3.05 at
any time during a Limitation Year, that account (i)
will not participate in the allocation of the Fund's
investment gains and losses and (ii) must be allocated
and reallocated to Participants' Individual Accounts
before any Employer Contributions or any Employee
contributions may be made to the Plan for that
Limitation Year. Excess Amounts may not be distributed
to Participants or former Participants.
B. If a Participant is covered under this Plan and another qualified
defined contribution Master or Prototype Plan, "welfare benefit fund"
(as defined in Section 419(e) of the Code), "individual medical
account" (as defined in Section 415(1)(2) of the Code) or "simplified
employee pension" (as defined in Section 408(k) of the Code),
maintained by the Employer and which provides an Annual Addition
during any Limitation Year, the following rules apply:
1. The Annual Additions which may be credited to a
Participant's Individual Account under this Plan for any
such Limitation Year cannot exceed the Maximum Permissible
Amount reduced by the Annual Additions credited to a
Participant's Individual Account under the other plans and
welfare benefit funds for the Same Limitation Year. If the
Annual Additions with respect to the Participant under other
qualified defined contribution Master or Prototype Plans,
welfare benefit funds, individual medical accounts and
simplified employee pensions maintained by the Employer are
less than the Maximum Permissible Amount and the Employer
Contribution that would have been contributed or allocated
to the Participant's Individual Account under this Plan
would cause the Annual Additions for the Limitation Year to
exceed this limit, the amount contributed or allocated is
reduced until the Annual Additions under all those plans and
funds for the Limitation Year equal the Maximum Permissible
Amount. If the Annual Additions with respect to the
Participant under those other qualified defined contribution
Master or Prototype Plans, welfare benefit funds, individual
medical accounts and simplified employee pensions in the
aggregate are equal to or greater than the Maximum
Permissible Amount, no amount is contributed or allocated to
the Participant's Individual Account under this Plan for the
Limitation Year.
2. Before determining the Participant's actual Compensation for
the Limitation Year, the Employer may determine the Maximum
Permissible Amount for a Participant as described in Section
3.05(A)(2).
3. Then, as soon as is administratively feasible after the end
of the Limitation Year, the Maximum Permissible Amount for
the Limitation Year is determined on the basis of the
Participant's actual Compensation for the Limitation Year.
4. If, under Section 3.05(B)(3) or as a result of the
allocation of Forfeitures, a Participant's Annual Additions
under this Plan and other plans would result in an Excess
Amount for a Limitation Year, the Excess Amount is treated
as if it were all from the last allocated Annual Additions,
except that Annual Additions attributable to a simplified
employee pension are treated as having been allocated first,
followed by Annual Additions to a welfare benefit fund or
individual medical account, regardless of the actual
allocation date.
5. If an Excess Amount is allocated to a Participant on an
allocation date of this Plan coinciding with an allocation
date of another plan, the Excess Amount attributed to this
Plan is the product of:
(a) The total Excess Amount allocated as of that date,
multiplied by
(b) The ratio of (i) the Annual Additions allocated to the
Participant for the Limitation Year as of that date
under this Plan to (ii) the total Annual Additions
allocated to the Participant for the Limitation Year as
of that
10
date under this Plan and all other qualified
master or prototype defined contribution plans.
6. Any Excess Amount attributed to this Plan is then eliminated
as described in Section 3.05(A)(4).
C. If the Participant is covered under another qualified defined
contribution plan maintained by the Employer, which is not a
Master or Prototype Plan, the Annual Additions credited to the
Participant's Individual Account under this Plan for any
limitation Year are limited under Sections 3.05(B)(1) through
3.05(B)(6), as if the other plan were a master or prototype plan,
unless other limits were selected in the Adoption Agreement.
D. If the Employer has ever maintained a qualified defined benefit
plan (other than a paired plan as shown in the Adoption Agreement)
covering any Participant in this Plan, the sum of the
Participant's "Defined Benefit Plan Fraction" (as defined in
Section 3.05(E)(3)) and "Defined Contribution Plan Fraction" (as
defined in Section 3.05(E)(5)) cannot exceed 1.0 in any Limitation
Year. The Annual Additions that may be credited to the
Participant's Individual Account under this Plan for any
Limitation Year are limited under the Adoption Agreement.
E. The terms below have the following meanings when used in this
Section 3.05:
1. Annual Additions: The sum of the following amounts credited
to a Participant's Individual Account for the Limitation
Year:
(a) Employer Contributions;
(b) Employee contributions;
(c) Forfeitures;
(d) Amounts allocated, after March 31, 1984, to an
"individual medical account (as defined in Section
415(l)(2) of the Code), which is part of a pension or
annuity plan maintained by the Employer are treated as
Annual Additions to a defined contribution plan. Also
amounts derived from contributions paid or accrued
after December 31, 1985, in taxable years ending after
that date, which relate to post-retirement medical
benefits allocated to the separate account of a "key
employee" (as defined in Section 419A(d)(3) of the
Code) under a "welfare benefit fund" (as defined in
Section 419(e) of the Code) maintained by the Employer
are treated as Annual Additions to a defined
contribution plan; and
(e) Allocations under a "simplified employee pension" (as
defined in Section 408(k) of the Code) maintained by
the Employee.
For this purpose, any Excess Amount applied under Section
3.05(A)(4) or 3.05(B)(6) in the Limitation Year to reduce
Employer Contributions are considered Annual Additions for
that Limitation Year.
2. Compensation: Compensation is defined as wages, salaries,
and fees for professional services and other amounts
received (without regard to whether or not an amount is paid
in cash) for personal services actually rendered in the
course of employment with the Employer maintaining the Plan
to the extent that the amounts are included in gross income
(including, but not limited to, commissions paid salesmen,
compensation for services on the basis of a percentage of
profits, commissions on insurance premiums, fringe benefits,
tips, bonuses and reimbursements or other expense allowances
under a nonaccountable plan (as described in Treasury
Regulation Section 1.62-2(c)), and excluding the following:
(a) Employer contributions to a plan of deferred
compensation which are not includible in the Employee's
gross income for the taxable year in which contributed,
or Employer contributions under a simplified employee
pension plan, or any distributions from a plan of
deferred compensation;
(b) Amounts realized from the exercise of a non-qualified
stock option, or when restricted stock (or property)
held by the Employee either becomes freely transferable
or is no longer subject to a substantial risk of
forfeiture;
(c) Amounts realized from the sale, exchange or other
disposition of stock acquired under a qualified stock
option; and
(d) Other amounts which received special tax benefits, or
contributions made by the Employer (whether or not
under a salary reduction agreement) towards the
purchase of an annuity described in Section 403(b) of
the Code (whether or not the amounts are actually
excludible from the gross income of the Employee).
For any self-employed individual, Compensation means Earned
Income.
For Limitation Years beginning after December 31, 1991, for
purposes of applyIng the limits of this Section 3.05,
Compensation for a Limitation Year is the Compensation
actually paid or includible in gross income during that
Limitation Year.
However, Compensation for a Participant in a defined
contribution plan who is permanently and totally disabled
(as defined in Section 22(e)(3) of the Code) is the
Compensation that Participant would have received for the
Limitation Year if the Participant had been paid at his or
her Compensation rate immediately before becoming
permanently and totally disabled; provided that imputed
Compensation for the disabled Participant is taken into
account only if the Participant is not a Highly Compensated
Employee and contributions made on behalf of the Participant
are fully Vested when made.
3. Defined Benefit Plan Fraction: A fraction, the numerator of
which is the sum of the Participant's projected annual
benefits under all defined benefit plans (whether or not
terminated) maintained by the Employer, and the denominator
of which is the lesser of 125% of the dollar limitation
determined for the Limitation Year under Section 415(b) and
(d) of the Code or 140% of the "Highest Average
Compensation" (as
11
defined in Section 3.05(E)(8)), including any adjustments
under Section 415(b) of the Code.
However, if the Participant was a participant as of the first day
of the first Limitation Year beginning after December 31, 1986,
in one or more defined benefit plans maintained by the Employer
which existed on May 6, 1986, the denominator of this Fraction is
not less than 125% of the sum of the annual benefits under those
plans which the Participant had accrued as of the close of the
last Limitation Year beginning before January 1, 1987, ignoring
any changes in the terms and conditions of the plan after May
5,1986, but only if the defined benefit plans individually and
together satisfied the requirements of Section 415 of the Code
for all Limitation Years beginning before January 1, 1987.
4. Defined Contribution Plan Dollar Limit: $30,000 or, if
greater, one-fourth of the defined benefit dollar limit
under Section 415(b)(1) of the Code, which is in effect for
the Limitation Year.
5. Defined Contribution Plan Fraction: A fraction, the
numerator of which is the sum of the Annual Additions to
the Participant's accounts under all defined contribution
plans (whether or not terminated) maintained by the
Employer for the current and all prior Limitation Years
(including the Annual Additions from (i) the Participant's
nondeductible employee contributions to all defined benefit
plans (whether or not terminated), (ii) "welfare benefit
funds" (as defined in Section 419(e) of the Code)
maintained by the Employer, (iii) "individual medical
accounts" (as defined in Section 415(1)(2) of the Code)
maintained by the Employer and (iv) "simplified employee
pensions" (as defined in Section 408(k) of the Code)
maintained by the Employer, and the denominator of which is
the sum of the maximum aggregate amounts for the current
and all prior Limitation Years of service with the Employer
(regardless of whether the Employer maintained a defined
contribution plan). The maximum aggregate amount in any
Limitation Year is the lesser of 125% of the dollar limit
under Section 415(b) and (d) of the Code in effect under
Section 415(c)(1)(A) of the Code or 35% of the
Participant's Compensation for that Year.
If the Employee was a Participant as of the end of the first day
of the first Limitation Year beginning after December 31, 1986,
in one or more defined contribution plans maintained by the
Employer which existed on May 6, 1986, the numerator of this
Fraction is adjusted if the sum of this Fraction and the Defined
Benefit Plan Fraction would otherwise exceed 1.0 under the terms
of this Plan. Under the adjustment, an amount equal to the
product of (1) the excess of the sum of the Fractions over 1.0,
multiplied by (2) the denominator of this Fraction, is
permanently subtracted from the numerator of this Fraction. The
adjustment is calculated using the Fractions as they would be
computed as of the end of the last Limitation Year beginning
before January 1, 1987, and disregarding any changes in the terms
and conditions of the Plan made after May 5, 1986, but using the
limit under Section 415 of the Code that applied on the first
Limitation Year beginning on or after January 1, 1987.
The Annual Addition for any Limitation Year beginning before
January 1, 1987, is not recomputed to treat all Employee
contributions as Annual Additions.
6. Employer: The Employer that adopts this Plan, and all
members of a "controlled group of corporations" (as defined
in Section 414(b) of the Code as modified by Section
415(h)), all "commonly controlled trades or businesses" (as
defined in Section 414(c) of the Code as modified by
Section 415(h)) or "affiliated service groups" (as defined
in Section 414(m) of the Code) of which the adopting
Employer is a part, and any other entity required to be
aggregated with the Employer under the Treasury Regulations
under Section 414(o) of the Code.
7. Excess Amount: The excess of the Participant's Annual
Additions for the Limitation Year over the Maximum
Permissible Amount.
8. Highest Average Compensation: The average Compensation for
the 3 consecutive Years of Vesting Service with the
Employer that produces the highest average.
9. Limitation Year: A calendar year, or the 12 consecutive-
month period selected for this purpose in the Adoption
Agreement. All qualified plans maintained by the Employer
must use the same Limitation Year. If the Limitation Year
is amended to a different 12 consecutive-month period, the
new Limitation Year must begin on a date within the
Limitation Year in which the amendment is made.
10. Master or Prototype Plan: A plan the form of which is the
subject of a favorable opinion letter from the Internal
Revenue Service.
11. Maximum Permissible Amount: The maximum Annual Addition
that may be contributed or allocated to a Participant's
Individual Account under the Plan for any Limitation Year
is the lesser of:
(a) The Defined Contribution Plan Dollar Limit; or
(b) 25% of the Participant's Compensation for the
Limitation Year.
The Compensation limit referred to in (b) does not apply to any
contribution for medical benefits (within the meaning of Section
401(h) or Section 419A(f)(2) of the Code) which is otherwise
treated as an Annual Addition under Section 415(l)(1) or
419A(d)(2) of the Code.
If a Short Limitation Year is created because of an amendment
changing the Limitation Year to a different 12 consecutive-month
period, the Maximum Permissible Amount must not exceed the
Defined Contribution Dollar Limit multiplied by the following
fraction:
Number of months in the short Limitation Year 12
12. Projected Annual Benefit: The annual retirement benefit
(adjusted to an actuarially equivalent straight life
annuity if that benefit is stated other than as a straight
life annuity qualified joint and survivor annuity) to which
the Participant would be entitled under the terms of the
Plan assuming:
12
(a) The Participant continues employment until Normal Retirement
Age (or current age, if later); and
(b) The Participant's Compensation for the current Limitation
Year and all other relevant factors used to determine
benefits under the Plan remain constant for all future
Limitation Years.
The term "straight life annuity" shall have the meaning set forth in
Section 12.01(I).
13
ARTICLE FOUR--INDIVIDUAL ACCOUNTS AND VALUATION
4.01 INDIVIDUAL ACCOUNTS
A. The Plan Administrator must establish and maintain an Individual
Account in the name of each Participant to reflect the total
value of his or her interest in the Fund. Each Individual
Account is made up of whatever sub-accounts may be needed for
each Participant, including:
1. A sub-account to reflect a Participant's Employer
Contributions and Forfeitures;
2. A subaccount to reflect a Participant's rollover
contributions;
3. A sub-account to reflect a Participant's transfer
contributions;
4. A sub-account to reflect a Participant's nondeductible
Employee contributions; and
5. A sub-account to reflect a Participant's deductible Employee
contributions.
These sub-accounts are only for accounting purposes and do not
require a segregation of the Fund.
B. The Plan Administrator is authorized to establish any other
accounts it believes are appropriate for the proper
administration of the Plan.
4.02 VALUATION OF FUND
The Fund is valued each Valuation Date at fair market value.
4.03 VALUATION OF INDIVIDUAL ACCOUNTS
A. If a Participant's Individual Account assets are completely or
partly invested in a Separate Fund, then the value of that
portion of the Participant's Individual Account at any relevant
time is the sum of the fair market values of the assets in that
Separate Fund, reduced by any applicable charges and penalties.
B. The fair market value of the other portions of each Individual
Account is determined follows:
1. First, the portion of the Individual Account invested in
each investment Fund as of the most recent Valuation Date is
determined. Then, that portion is (a) reduced by (i) any
withdrawals made from the applicable Investment Fund to or
for the benefit of a Participant or his or her Beneficiary,
(ii) any Forfeitures by the Participant under Section
6.01(D) and (iii) any transfer to another Investment Fund
since the most recent Valuation Date, and (b) increased by
any amount transferred from another Investment Fund since
the most recent Valuation Date. The resulting amounts are
the net Individual Account portions invested in the
Investment Funds.
2. Second, the net Individual Account portions invested in each
Investment Fund are increased or decreased (based on the
ratio that each net Individual Account portion bears to the
sum of all net Individual Account portions), so that the sum
of all the net Individual Account portions invested in an
Investment Fund equals the then fair market value of the
Investment Fund. However, for the first Plan Year only, the
net Individual Account portions are the sum of all
contributions made to each Participant's Individual Account
during the Plan Year.
3. Third, any contributions to the Plan and Forfeitures are
allocated as described in Article 3. Under Article 4,
contributions made by the Employer for any Plan Year, but
after that Plan Year, are considered to have been made on
the last day of that Plan Year regardless of when they are
paid to the Trustee.
Amounts contributed between Valuation Dates are credited
with investment gains or losses until the next Valuation
Date.
4. Fourth, the portions of the Individual Account invested in
each Investment Fund determined under (1), (2) and (3) above
are added.
4.04 SEGREGATION OF ASSETS
If a Participant elects a distribution other than in a lump sum, the Plan
Administrator may place the Participant's account balance in a segregated
Investment Fund for the purpose of having sufficient liquidity to provide
benefit installments.
4.05 MODIFICATION OF METHOD FOR VALUING INDIVIDUAL ACCOUNTS
The Plan Administrator is authorized to establish other procedures (in a
uniform and nondiscriminatory manner) for determining the fair market
value of the Individual Accounts, if the Plan Administrator believes it
would be necessary or appropriate to do so.
14
ARTICLE FIVE--TRUST FUND
5.01 CREATION OF FUND
By adopting this Plan, the Employer is establishing the Fund consisting
of the assets of the Plan held by the Trustee under the Trust Agreement.
Assets within the Fund may be pooled on behalf of all Participants,
earmarked on behalf of each Participant or be a combination of pooled and
earmarked. To the extent that assets are earmarked for a particular
Participant, they are held in a Separate Fund for that Participant.
No part of the corpus or income of the Fund may be used for, or diverted
to, purposes other than for the exclusive benefit of Participants and
their Beneficiaries.
5.02 INVESTMENT AUTHORITY
Except as provided in the Adoption Agreement (relating to Participant-
directed investments) or the Trust Agreement, the Employer has the
exclusive authority to determine who will exercise exclusive management
and control over the investment of the Fund. The Employer is a "named
fiduciary" of the Plan within the meaning of Section 402(a) of ERISA.
5.03 INDEMNIFICATION OF PROTOTYPE SPONSOR AND TRUSTEE
Regardless of any other Plan provision, to the fullest extent permitted
by applicable law, the Employer agrees to indemnify and hold harmless the
Trustee and the Prototype Sponsor, and each of their officers, directors,
employees and agents (collectively, the "Indemnified Parties") from and
against any and all claims, liabilities, damages, judgements,
settlements, losses, costs, charges, or expenses (including legal fees
and disbursements) asserted against any Indemnified Party at any time as
a result of, arising out of or based upon the adoption, maintenance,
administration, operation or termination of this Plan, or any action
taken by those parties in the performance of their duties with respect to
this Plan, unless there is a final adjudication against them of gross
negligence or willful misconduct in the performance of those duties.
Further, to the fullest extent permitted by applicable law, the Employer
agrees to indemnify the Indemnified Parties from any loss, liability,
cost, damage, claim or expense (including legal fees and disbursements)
which the Trustee and/or the Prototype Sponsor incurs by reason of or
which results, in whole or in part, from the Trustee's or Prototype
Sponsor's reliance on the facts and other directions and elections the
Employer communicates or fails to communicate.
5.04 LIFE INSURANCE PURCHASES
A. If any life insurance policy is purchased for a Participant, the
total premiums are limited as follows:
1. Ordinary Life Insurance - If ordinary life insurance contracts
(that is, contracts with both nondecreasing death benefits and
nonincreasing premiums) are purchased, less than 50% of the total
Employer Contributions and Forfeitures allocated to any
Participant's Individual Account may be used to pay their
premiums.
2. Term and Universal Life Insurance - No more than 25% of the total
Employer Contributions and Forfeitures allocated to any
Participant's Individual Account may be used to pay the premiums
on term life insurance contracts, universal life insurance
contracts, and all other life insurance contracts that are not
ordinary life.
3. Combination - The sum of 50% of the ordinary life insurance
premiums and all other life insurance premiums must not be
greater than 25% of the aggregate Employer Contributions and
Forfeitures allocated to any Participant's Individual Account.
B. Dividends or credits earned on insurance contracts for a
Participant are allocated to his or her Individual Account.
C. Subject to the joint and survivor annuity requirements contained
in Section 6.06, the contracts on a Participant's life are
converted to cash converted into an annuity or distributed to
him or her when his or her benefits start.
D. The Trustee applies for and is the owner of any insurance
contract(s) purchased under this Plan. The insurance contract(s)
must provide that proceeds are payable to the Trustee, however,
the Trustee is required to pay over all proceeds of the
contract(s) to the Participant's designated Beneficiary in
accordance with the distribution provisions of this Plan. A
Participant's spouse automatically is the designated Beneficiary
of the proceeds if the joint and survivor annuity rules contained
in Section 6.06 are applicable. Under no circumstances may the
Fund retain any part of the proceeds. If the terms of this Plan
and the terms of any purchased insurance contract conflict, the
Plan provisions control.
E. The Employer may direct the Trustee to sell and distribute
insurance or annuity contracts to a Participant (or any other
permitted party) to the extent permitted by applicable law.
5.05 PARTICIPANTS' DIRECTION OF INVESTMENTS
If selected in the Adoption Agreement by the Employer, each Participant
may direct the Trustee regarding the investment of part or all of his or
her Individual Account. To the extent of that direction, the Employer,
Plan Administrator, Trustee and all other fiduciaries are relieved of
their fiduciary responsibility under Section 404 of ERISA, and this Plan
is intended to be a Plan described in Section 404(c) of ERISA.
The Employer will cause a Separate Fund to be established in the name of
each Participant who directs the investment of part or all of his or her
Individual Account. Each Separate Fund is charged or credited (as
appropriate) with the earnings, gains, losses and/or expenses relating to
that Separate Fund. No fiduciary is liable for any loss resulting from a
Participant's individual investment direction. The assets subject to
individual direction cannot be invested (1) in "collectibles" as that
term is defined in Section 408(m) of the Code, (2) in any investment that
would constitute a non-exempt "prohibited transaction" within the meaning
of Section 406 of ERISA or Section 4975 of the Code or (3) in any
investment which would result in the failure to satisfy the requirements
of Section 404(c) of ERISA.
The Plan Administrator is authorized and directed to establish uniform
and nondiscriminatory rules relating to individual direction which it
determines to be necessary or advisable including, but not limited to,
rules describing (1) which portions of a Participant's Individual Account
can be so directed; (2) the frequency of investment changes; (3) the
forms and procedures for making investment changes; and (4) the effect of
a Participant's failure to make a valid direction.
The Plan Administrator may, in a uniform and non-discriminatory manner,
limit the available investments for Participants' direction to certain
specified investment options (including, but not limited to, certain
mutual funds, investment contracts, deposit accounts and group trusts).
15
The Plan Administrator may permit, in a uniform and nondiscriminatory
manner, a Beneficiary of a deceased Participant to direct investments
under this Section 5.05.
16
ARTICLE SIX--VESTING AND DISTRIBUTION
6.01 DISTRIBUTION TO PARTICIPANT
A. When Distributable-
1. Entitlement to Distribution - The Vested portion of a
Participant's Individual Account is distributable to
him or her as of the earliest to occur of any of the
following:
(a) His or her Termination of Employment;
(b) He or she attains Normal Retirement Age (if
selected in the Adoption Agreement);
(c) His or her Disability; or
(d) The termination of the Plan.
2. Written Request: When Distributed - A Participant
entitled to distribution and who wishes to receive a
distribution must submit a written request to the Plan
Administrator on a form provided by the Plan
Administrator. After receiving a valid request
accompanied by any consent required by this Article
Six, the Plan Administrator must direct the Trustee to
begin the distribution no later than 90 days after the
later of:
(a) The last day of the Plan Year in which the event
happens after the Participant becomes entitled to
a distribution; or
(b) The last day of the Plan Year in which the request
is received.
3. Special Rules For In-Service Withdrawals of Employer
Contributions - If the Plan is a profit sharing plan
and if selected in the Adoption Agreement, a
Participant who is not entitled to a distribution under
Section 6.01(A)(1) may, subject to the requirements of
Section 6.06 (if applicable), elect to receive a
distribution of all or a part of the Vested portion of
his or her Individual Account attributable to Employer
Contributions, as follows:
(a) Participant for 5 or more Years - An Employee who
has been a Participant in the Plan for 5 or more
years may withdraw Vested Employer Contributions
and their investment earnings.
(b) Participant for Less than 5 Years - An Employee
who has been a Participant in the Plan for less
than 5 years may withdraw Vested Employer
Contributions that have been in his or her
Individual Account for at least 2 full Plan Years
and their earnings.
(c) After Attaining Age 59-1/2 - A Participant who has
attained age 59-1/2 may withdraw Employer
Contributions and their investment earnings.
However, if the distribution is because of "hardship,"
the Participant may under Section 6.04 withdraw all
Employer Contributions and their investment earnings.
4. Commencement of Benefits - Notwithstanding the time
limitations set forth in Section 6.01(A)(2), unless the
Participant makes another election, distribution of
benefits must begin no later than 60 days after the
latest of the last day of the Plan Year in which:
(a) He or she attains Normal Retirement Age;
(b) The 10th anniversary of the beginning of his or
her Plan participation occurs; or
(c) He or she has a Termination of Employment.
However, if the Participant and his or her spouse fail
to consent to a distribution while a benefit is
"immediately distributable" (as defined in Section
6.02(B)), their failure to elect is treated as an
election to defer the start of payment of any benefit,
and the requirements of this Section 6.01(A)(4) are
satisfied.
B. Determining the Vested Portion - In determining the Vested
portion of a Participant's Individual Account, the following
rules apply:
1. Employer Contributions and Forfeitures - The Vested
portion of a Participant's Individual Account derived
from Employer Contributions and Forfeitures is set by
the vesting schedule selected in the Adoption
Agreement (or the vesting schedule described in
Section 6.01(C) if the Plan is a Top-Heavy Plan).
2. Rollover and Transfer Contributions - A Participant is
fully Vested in his or her rollover contributions,
transfer contributions and the investment earnings on
these contributions.
3. Fully Vested Under Certain Circumstances - A
Participant is fully Vested in all funds in his or her
Individual Account if any of the following happens:
(a) He or she attains Normal Retirement Age;
(b) His or her Disability;
(c) He or she dies;
(d) The Plan is terminated or, to the extent of the
partial termination, partially terminated and in
the case of a partial termination, the Participant
is affected by that partial termination; or
(e) A total discontinuance of Plan contributions (if
this Plan is a profit-sharing plan).
4. Employee Contributions - Employee contributions and
earnings thereon will be nonforfeitable at all times.
C. Minimum Vesting Schedule for Top-Heavy Plans - The following
vesting provisions apply for any Plan Year in which this
Plan is a Top-Heavy Plan. (This Section 6.01(C) does not
apply to the Individual Account of any Employee who does not
have an Hour of Service after the Plan first becomes a Top-
Heavy Plan.)
Regardless of the other vesting rules of this Section 6.01
or the vesting schedule selected in the Adoption Agreement
(unless those provisions or that schedule provide faster
vesting), the Vested portion of a Participant's Individual
Account derived from Employer Contributions and Forfeitures
is determined from this minimum vesting schedule:
17
Years of
Vesting
Service Vested Percentage
1 0
2 20
3 40
4 60
5 80
6 100
This minimum vesting schedule applies to all benefits
(within the meaning of Section 411(a)(7) of the Code),
except benefits derived from Employee contributions. A
Participant's Vested percentage does not decrease if the
Plan's status as a Top-Heavy Plan subsequently changes for
any Plan Year.
If the Plan stops being a Top-Heavy Plan, the vesting
schedule selected in the Adoption Agreement applies again,
subject to the restrictions above. If the vesting schedule
under the Plan shifts in or out of Top-Heavy Plan status,
that shift is an amendment to the vesting schedule and the
election in Section 9.04 applies.
D. Break in Vesting Service and Forfeitures
1. Cash-out of Certain Participants - If the value of the
Vested portion of the Participant's Individual Account
is not (and never was prior to any Plan distribution)
greater than $3,500, he or she receives a distribution
of the entire Vested portion of his or her Individual
Account and the portion which is not Vested is treated
as a Forfeiture. For purposes of this Section
6.01(D)(1), if the value of the Vested portion of a
Participant's Individual Account is zero, the
Participant is treated as if he or she had received a
distribution of that Vested Individual Account. A
Participant's Vested Individual Account balance does
not include accumulated deductible Employee
contributions within the meting of Section 72(o)(5)(B)
of the Code for Plan Years beginning before January 1,
1989.
2. Participants Who Elect to Receive Distributions. If a
Participant elects to receive a distribution under
Section 6.02(B) of the value of the Vested portion of
his or her Individual Account derived from Employee and
Employer Contributions, the portion which is not Vested
is a Forfeiture.
3. Re-employed Participants - If a Participant receives or
is treated as if he or she received a distribution
under Section 6.01(D)(1) or (2) above and the
Participant resumes employment covered under this Plan,
the Participant's Employer-derived Individual Account
balance is restored to the amount on the date of
distribution if he or she repays the Plan the full
amount of the distribution derived from Employer
Contributions before the earlier of: (i) 5 years after
the first date on which he or she again becomes an
Employee or (ii) the date he or she incurs 5
consecutive Breaks in Vesting Service after the date of
the distribution.
4. Regardless of anything in this Section 6.01(D) to the
contrary, a Participant who does not receive or is not
treated as receiving a distribution under Section
6.01(D)(1) or (2) above, and who has 5 consecutive
Breaks in Vesting Service, shall have a Forfeiture of
the portion of his or her Individual Account that is
not Vested.
E. Distribution Prior to Full Vesting -If a distribution is
made to a Participant who was not fully Vested in his or her
Individual Account derived from Employer Contributions, and
that Participant could increase the percentage in which he
or she is Vested (for example by timely returning to the
Employer's employ or by continuing in the Employer's
employment) then the following rules apply:
1. A separate account is established for the Participant's
interest in the Plan as of the time of the
distribution, and
2. At any relevant time the Participant's Vested portion
of the separate account equals an amount ("X"),
determined by the formula: X=P (AB + (R x D))-(R x D)
where "P" is the Vested percentage at the relevant
time, "AB" is the separate account balance at the
relevant time; "D" is the amount of the distribution;
and "R" is the ratio of the separate account balance at
the relevant time to the separate account balance after
distribution.
6.02 FORM OF DISTRIBUTION TO A PARTICIPANT
A. Value of Individual Account Is Not Greater Than $3,500 - If
the value of the Vested part of a Participant's Individual
Account coming from Employee and Employer Contributions as
of the most recent Valuation Date is not (and never was
prior to any Plan distribution) greater than $3,500, a
single lump sum distribution is made to the Participant from
the Plan.
B. Value of Individual Account Is Greater Than $3,500
1. If the value of the Vested part of a Participant's
Individual Account coming from Employee and Employer
Contributions as of the most recent Valuation Date is
greater than (or at the time of any prior Plan
distribution was greater than) $3,500, and the
Individual Account is "immediately distributable" (as
defined later in this Section 6.02(B)(1)), the
Participant and the Participant's spouse (or where
either the Participant or the spouse died, the
survivor) must consent to any distribution. The consent
of the Participant and the Participant's spouse must be
in writing, must be witnessed by a Plan representative
or a notary public, must acknowledge its effect and
must be given within the 90-day period ending on the
"annuity starting date." The "annuity starting date" is
the first day of the first period for which an amount
is payable under the Plan as an annuity or any other
form. The Plan Administrator must notify the
Participant and the Participant's spouse of the right
to defer any distribution until the Participant's
Individual Account is no longer immediately
distributable. The notification must include a general
description of the important features, and an
explanation of the relative values, of the optional
forms of benefit available under the Plan (as described
in Section 417(a)(3) of the Code), and must be provided
no less than 30 days and no more than 90 days before
the annuity starting date. However, distribution may
commence less than 30 days after the notice described
in the preceding sentence is given, provided that the
distribution is one to which Sections 401(a)(11) and
417
18
of the Code do not apply, the Plan Administrator
clearly informs the Participant that the Participant
has a right to a period of at least 30 days after
receiving the notice to consider the decision of
whether or not to elect a distribution (and, if
applicable, a particular distribution option), and the
Participant, after receiving the notice, affirmatively
elects a distribution.
However, only the Participant has to consent to the
start of a distribution in the form of a qualified
joint and survivor annuity while the Individual Account
is immediately distributable. (Furthermore, if payment
in the form of a qualified joint and survivor annuity
is not required with respect to the Participant
pursuant to Section 6.06(G) of the Plan, only the
Participant need consent to a distribution while the
Individual Account is immediately distributable.) No
one's consent is needed for a distribution that is
required to satisfy Section 401(a)(9) or Section 415 of
the Code. In addition, if the Plan is terminated and
the Plan does not offer an annuity option (purchased
from a commercial provider), a Participant's Individual
Account may be distributed to him or her or transferred
to another defined contribution plan (other than an
employee stock ownership plan as defined in Section
4975(e)(7) of the Code) in the same controlled group
without his or her consent.
An Individual Account is "immediately distributable" if
any part could be distributed to the Participant (or
surviving spouse) before the Participant attains or
would have attained (if he or she had not died) the
later of Normal Retirement Age or age 62.
2. For distributions before the first day of the first
Plan Year beginning after December 31, 1988, the Vested
portion of a Participant's Individual Account does not
include amounts derived from "accumulated deductible
employee contributions" under Section 72(o)(5)(B) of
the Code.
C. Other Forms of Distribution to Participant -
1. Profit-Sharing Plan or 401(k) Profit-Sharing Plan-If
this Plan is a "Profit Sharing Plan" or a "401(k)
Profit Sharing Plan" (that is, Adoption Agreement Xx.
000, Xx. 000, Xx. 000 or No. 006 was used by the
Employer to adopt the Plan), and if the value of the
Vested portion of a Participant's Individual Account is
greater than $3,500, and (a) the Participant's spouse
is his or her Beneficiary, or (b) the Participant's
spouse has consented to the Participant's designation
of someone else as his or her Beneficiary under Section
6.03(A), the Vested portion of the Participant's
Individual Account will be paid in a lump sum, unless
the Participant requests in writing that the Vested
portion of his or her Individual Account be paid in one
or more of the following forms of payment selected in
the Adoption Agreement (except for option 3): (1) in
installment payments for a period not to exceed the
life expectancy of the Participant or the joint and
last survivor life expectancy of the Participant and
his or her designated Beneficiary; (2) applied to the
purchase of an annuity contract; or (3) for
distributions beginning after December 31, 1992, in a
direct transfer to the trustee or custodian of an
"eligible retirement plan" (as defined in Section
402(c)(8)(B) of the Code) for his or her benefit, in
the manner described in Section 401(a)(31) of the Code
and the related Treasury Regulations. Distribution
option (3) above is intended only to comply with the
requirements of Section 401(a)(31) of the Code, and
that option (A) will automatically apply without any
specific selection in the Adoption Agreement, and (B)
will no longer be available under this Plan, without
any amendment, if that Code requirement ceases to
apply.
2. Money Purchase Plan or Target Benefit Plan - If this
Plan is a "Money Purchase Plan" or a "Target Benefit
Plan" (that is, Adoption Agreement No. 001, 003, 007 or
008 was used by the Employer to adopt the Plan), and if
the value of the Vested portion of a Participant's
Individual Account is greater than $3,500 and the
Participant has waived the joint and survivor annuity
as described in this Section 6.02, the Participant may
request in writing that the Vested portion of his or
her Individual Account be paid in one or more of the
following forms of payment selected in the Adoption
Agreement (except for option 4): (1) in a lump sum; (2)
in installment payments for a period not to exceed the
life expectancy of the Participant or the joint and
last survivor life expectancy of the Participant and
his or her designated Beneficiary; (3) applied to the
purchase of an annuity contract; or (4) for
distributions beginning after December 31, 1992, in a
direct transfer to the trustee or custodian of an
"eligible retirement plan" (as defined in Section
402(c)(8)(B) of the Code) for his or her benefit, in
the manner described in Section 401(a)(31) of the Code
and the related Treasury Regulations. Distribution
option (4) above is intended only to comply with the
requirements of Section 401(a)(31) of the Code, and
that option (A) will automatically apply without any
specific selection in the Adoption Agreement, and (B)
will no longer be available under this Plan, without
any amendment, if that Code requirement ceases to
apply.
D. Distribution in Kind - The Plan Administrator may cause any
distribution under this Plan to be made either in the form
actually held in the Fund, or in cash by converting Fund
assets into cash, or in any combination.
6.03 DISTRIBUTIONS UPON THE DEATH OF A PARTICIPANT
A. Naming a Beneficiary - Spousal Consent - Each Participant
may designate, on a form provided by the Plan Administrator,
one or more Beneficiaries to receive all or a specified part
of his or her Individual Account upon his or her death. A
Participant changes or revokes Beneficiary designations by
completing and delivering a properly completed Beneficiary
designation form to the Plan Administrator.
If a Participant wishes to name a primary Beneficiary who is
not his or her spouse, the spouse must consent to that
designation in writing, and the spouse's consent must
acknowledge its effect and be witnessed by a Plan
representative or notary public. However, if the Participant
establishes to the satisfaction of the Plan Administrator
that a written consent may not be
19
obtained because there is no spouse or the spouse cannot be
located, no consent is required. Any change of Beneficiary
requires a new spousal consent, unless in the existing
consent the spouse expressly waived the right to consent to
all future Beneficiary designations.
B. Payment to Beneficiary - If a Participant dies before his or
her entire Individual Account has been paid out, the
Individual Account becomes payable to any surviving
designated Beneficiary. If no Beneficiary survives the
Participant, the Participant's Beneficiary will be the
Participant's estate.
C. Beneficiary Requests for Distribution - A Beneficiary of a
deceased Participant who is entitled to a Plan distribution
and who wishes to receive a distribution must submit a
written request to the Plan Administrator on a form provided
by the Plan Administrator and accompanied by those documents
the Plan Administrator may require. After a valid request,
the Plan Administrator will direct the Trustee to start
distribution no later than 90 days after the later of:
1. The last day of the Plan Year in which the Participant
dies; or
2. The last day of the Plan Year in which request is
received.
D. Unlocated Participant or Beneficiary - If all or any portion
of the Plan distribution payable to a Participant or his or
her Beneficiary remains unpaid for more than 2 years because
the Plan Administrator has not been able to locate the
Participant or Beneficiary, as the case may be, after
sending a certified letter, return receipt requested, to his
or her last known address, and after further diligent
effort, the amount distributable becomes a Forfeiture.
However, if the Participant or Beneficiary is later located
that benefit is restored; except that any amount lost by
reason of escheat or required payment to a governmental
authority under State or any Federal law is not restored.
6.04 FINANCIAL HARDSHIP WITHDRAWALS
If this Plan is a profit-sharing plan (other than a profit-sharing
plan which includes a cash or deferred arrangement described in
Section 401(k) of the Code - that is, Adoption Agreement No. 002 or
004 was used by the Employer to adopt the Plan), if this option is
selected in the Adoption Agreement, in-service withdrawals may be made
by a Participant of any Vested portion of his Individual Account on
account of financial hardship which cannot be met from the
Participant's other available resources. The Plan Administrator, in a
uniform and nondiscriminatory manner consistent with applicable Code
requirements, will establish written guidelines for such hardship
withdrawals. The Plan Administrator may require appropriate
documentation to substantiate any such financial need as a condition
for such a withdrawal and may establish any limitations on such
withdrawal as he or she believes are necessary or appropriate for
effective administration of the Plan.
If this Plan is a profit-sharing plan which includes a cash or
deferred arrangement described in Section 401(k) of the Code (that is,
Adoption Agreement No. 005 or 006 was used by the Employer to adopt
the Plan), if this option is selected in the Adoption Agreement, in-
service financial hardship withdrawals will be limited to a
Participant's rollover contribution sub-account and/or transfer
contribution sub-account.
6.05 FORM OF DISTRIBUTION TO BENEFICIARY
A. Value of Individual Account Not Larger Than $3,500. If the
value of the Participant's individual Account as of the most
recent Valuation Date is not (and never was prior to any
Plan distribution) greater than $3,500, a single lump sum
distribution is made to the Beneficiary from the Plan.
B. Value of Individual Account Larger Than $3,500 - If the
value of a Participant's Individual Account as of the most
recent Valuation Date is (or ever was prior to any Plan
distribution) greater than $3,500, the joint and survivor
annuity requirements of Section 6.06 apply unless waived as
described in that Section.
C. Other Forms of Distribution to Beneficiary - If the value of
a Participant's Individual Account as of the most recent
Valuation Date is (or ever was prior to any Plan
distribution) greater than $3,500, and the Participant has
waived the preretirement survivor annuity as described in
Section 6.06, the Beneficiary may, subject to the applicable
requirements contained in Section 6.07, request in writing
that the Participant's Individual Account be paid to him or
her either: (1) in a lump sum or (2) in installment payments
over a period not to exceed the Beneficiary's life
expectancy.
6.06 JOINT AND SURVIVOR ANNUITY REQUIREMENTS
A Only if the Plan is described in Section 401(a)(11)(B) of
the Code will the requirements of this Section 6.06 apply to
the Plan. If Section 6.06 does apply to the Plan, then these
requirements will apply to any Participant who had at least
one Hour of Service on or after AugUst 23, 1984, and any
other Participants to the extent provided in Section
6.06(F).
B. Qualified Joint and Survivor Annuity - Unless an optional
form of benefit was selected by a Qualified Election during
the 90-day period ending on the Annuity Starting Date, a
married Participant's Vested account balance is paid in the
form of a "Qualified Joint and Survivor Annuity" (as defined
in Section 6.06(D)(4)) and an unmarried Participant's Vested
account balance is paid in the form of a life annuity. The
Participant may elect to have payment of the annuity
commence when he or she attains the "Earliest Retirement
Age" (as defined in Section 6.06(D)(2)) under the Plan.
C. Qualified Preretirement Survivor Annuity - Unless an
optional form of benefit was selected pursuant to a
Qualified Election during the "Election Period" (as defined
in Section 6.06(D)(1)), a married Participant who dies
before the annuity starting date has his or her Vested
account balance applied to purchase an annuity for the life
of his or her "Surviving Spouse" (as defined in Section
6.06(D)(5)) (a "Qualified Preretirement Survivor
Annuity"). The Surviving Spouse may elect to have payment
of that annuity start within a reasonable period after the
Participant's death.
D. Definitions -
1. Election Period: The period starting on the first day
of the Plan Year in which the Participant attains age
35 and ending on the date of his or her death. If a
Participant separates from service before the first day
of the Plan Year in which he or she attains age 35, the
Election Period with respect to the account balance (as
of the date of
20
separation) begins on the date of separation.
Pre-Age 35 Waiver - A Participant who will not attain
age 35 by the end of any given Plan Year may make a
special "Qualified Election" (as defined in Section
6.06(D)(3)) to waive the Qualified Preretirement
Survivor Annuity for the period starting on the date of
that election and ending on the first day of the Plan
Year in which the Participant will attain age 35. That
election is not valid unless the Participant receives a
written explanation of the qualified preretirement
survivor annuity in terms that are comparable to the
explanation required under Section 6.06(E)(1).
Qualified Preretirement Survivor Annuity coverage
starts again automatically as of the first day of the
Plan Year in which the Participant attains age 35. Any
new waiver on or after that date is subject to the full
requirements of this Section 6.06.
2. Earliest Retirement Age: The earliest date on which,
under the Plan, the Participant could elect to receive
retirement benefits.
3. Qualified Election: An election not to receive (i.e., a
waiver of) a Qualified Joint and Survivor Annuity or a
Qualified Preretirement Survivor Annuity. Any waiver
of a Qualified Joint and Survivor Annuity or a
Qualified Preretirement Survivor Annuity is not
effective unless: (a) the Participant's Spouse consents
in writing to the election, (b) the election names a
specific Beneficiary, including any class of
Beneficiaries or any contingent Beneficiaries, which
may not be changed without spousal consent (or the
Spouse expressly permits the Participant to make
changes without any further spousal consent); (c) the
Spouse's consent acknowledges the effect of the
election; and (d) the Spouse's consent is witnessed by
a Plan representative or a notary public. A
Participant's waiver of the Qualified Joint and
Survivor Annuity is not effective unless the election
designates a form of benefit payment that cannot be
changed without spousal consent (or the Spouse
expressly permits designations by the Participant
without any further spousal consent). If it is
established to the satisfaction of the Plan
Administrator that there is no Spouse or that the
Spouse cannot be located, a waiver is treated as a
Qualified Election.
Any spousal consent under this provision (or
establishment that spousal consent cannot be obtained)
is effective only for that Spouse. A consent that
permits future designations by the Participant without
any requirement of additional consent by the Spouse
must acknowledge that the Spouse has the right to limit
consent to a specific Beneficiary, and a specific form
of benefit where applicable, and that the Spouse
voluntarily elects to give up either or both of those
rights. A revocation of a prior waiver may be made by a
Participant without spousal consent at any time before
the benefits begin. The number of revocations is not
limited. No consent obtained under this provision is
valid unless the Participant receives the notice
described in Section 6.06(E).
4. Qualified Joint and Survivor Annuity: An immediate
annuity for the life of the Participant with a survivor
annuity for the life of the Spouse which is not less
than 50% and not more than 100% of the amount of the
annuity payable during the joint lives of the
Participant and the Spouse and which is the amount of
benefit that can be purchased with the Participant's
Vested Individual Account. The percentage of the
survivor annuity under the Plan is 50%.
5. Spouse (Surviving Spouse): The spouse or surviving
spouse of the Participant to whom the Participant was
married throughout the 1-year period ending on his or
her Annuity Starting Date or date or death, as
applicable, except to the extent that a former spouse
is treated as the spouse or surviving spouse and a
current spouse is not treated as the spouse or
surviving spouse under a qualified domestic relations
order as described in Section 414(p) of the Code.
6. Annuity Starting Date: The first day of the first
period for which an amount is payable from the Plan as
an annuity or in any other form.
7. Vested Account Balance: The aggregate value of the
Participant's Vested account balances derived from
Employer Contributions and Employee contributions
(including rollovers), whether Vested before or upon
death, including the proceeds of insurance contracts,
if any, on the Participant's life. The provisions of
this Section shall apply to a Participant who is Vested
in amounts attributable to Employer Contributions,
Employee contributions (or both) at the time of death
or distribution.
E. Notice Requirements -
1. For a Qualified Joint and Survivor Annuity, the Plan
Administrator must, at least 30 days and not more than
90 days before the Annuity Starting Date, provide each
Participant with a written explanation of: (a) the
terms and conditions of a Qualified Joint and Survivor
Annuity; (b)the Participant's right to waive and the
effect of waiving the Qualified Joint and Survivor
Annuity form of benefit; (c) the rights of a
Participant's Spouse; and (d) the right to revoke and
the effect of revoking an earlier waiver of the
Qualified Joint and Survivor Annuity.
2. For a Qualified Preretirement Survivor Annuity, the
Plan Administrator must provide each Participant within
his or her "Applicable Period" (as defined in the
following paragraph) a written explanation of the
Qualified Preretirement Survivor Annuity in terms that
are comparable to the explanation required under
Section 6.06(E)(1) for a Qualified Joint and Survivor
Annuity.
The "Applicable Period" for a Participant is whichever
of the following periods ends last: (a) the period
stating with the first day of the Plan Year in which
the Participant attains age 32 and ending with the last
day of the Plan Year before the Plan Year in which the
Participant attains age 35; (b) a reasonable period
endIng after the individual becomes a Participant; (c)
a reasonable period ending after Section 6.06(E)(3)
ceases to apply to the Participant; or (d) a reasonable
per-
21
iod ending after this section 6.06 first applies to the
Participant. However, notice must be provided within a
reasonable period ending after separation from service
in the case of a Participant who separates from service
before attaining age 35.
For purposes of applying the immediately preceding
paragraph, a reasonable period ending after the events
described in (b), (c) and (d) is the end of the two-
year period starting one year before the date the
applicable event occurs, and ending one year after that
date. If a Participant separates from service before
the Plan Year in which he or she attains age 35, notice
must be provided in the two-year period beginning one
year before separation and ending one year after
separation. If the Participant returns to employment
with the Employer, the Applicable Period for that
Participant is redetermined.
3. The notices required by this Section 6.05(E), do not
have to be given to a Participant if (a) the Plan
"fully subsidizes" the costs of a Qualified Joint and
Survivor Annuity or Qualified Preretirement Survivor
Annuity, and (b)the Plan does not allow the Participant
to waive the Qualified Joint and Survivor Annuity or
Qualified Preretirement Survivor Annuity and does not
allow a married Participant to designate a Beneficiary
other than his or her Spouse. For this purpose, a plan
fully subsidizes the costs of a benefit if no increase
in cost, or decrease in benefits to the Participant may
result from the Participant's failure to elect another
benefit.
F. Transitional Rules -
1. Any living Participant who separated from employment
with at least 10 Years of Vesting Service, but who was
not receiving benefits on August 23, 1984 and would not
have been covered by the previous subsections of this
Section 6.06 must be given the opportunity to elect to
have these subsections apply if the Participant is
credited with at least one Hour of Service under this
Plan or a predecessor plan in a Plan Year starting on
or after January 1, 1976.
2. Any living Participant who was not receiving benefits
on August 23, 1984, but who had at least one Hour of
Service under this Plan or a predecessor plan on or
after September 2, 1974, and who is not otherwise
credited with any service in a Plan Year beginning on
or after January 1, 1976, must be given the opportunity
to have his or her benefits paid in accordance with
Section 6.06(F)(4).
3. The opportunities to elect (as described in Section
6.06(F)(1) and (2) above) must be given to the
appropriate Participants during the period starting on
August 23, 1984, and ending on the date when Plan
benefits could otherwise begin to be paid to them.
4 Any Participant who has elected under Section
6.06(F)(2) and any Participant who does not elect under
Section 6.05(E)(1) or who meets the requirements of
Section 6.06(F)(1) except that the Participant does not
have at least 10 Years of Vesting Service when he or
she separates from service, shall have his or her
benefits distributed in accordance with all of the
following requirements if benefits would have been
payable in the form of a life annuity:
(a) Automatic Joint and Survivor Annuity - If benefits
in the form of a life annuity become payable to a
married Participant who:
(1) Begins to receive payments under the Plan on
or after Normal Retirement Age; or
(2) Dies on or after Normal Retirement Age while
still working for the Employer; or
(3) Begins to receive payments on or after the
"Qualified Early Retirement Age" (as defined
in Section 6.06(F)(4)(C)(1)); or
(4) Separates from service on or after attaining
Normal Retirement Age (or the qualified early
retirement age) and after satisfying the
eligibility requirements for the payment of
benefits under the Plan and then dies before
beginning to receive those benefits;
then those benefits will be received under
this Plan in the form of a Qualified Joint
and Survivor Annuity, unless the Participant
has elected otherwise during the Election
Period. The Election Period must begin at
least 6 months before the Participant attains
Qualified Early Retirement Age and ends not
more than 90 days before the commencement of
benefits. Any election hereunder will be in
writing and may be changed by the Participant
at any time.
(b) Election of Early Survivor Annuity - A Participant who is
employed after attaining the Qualified Early Retirement Age
will be given the opportunity to elect, during the Election
Period, to have a survivor annuity payable on death. If the
Participant elects the survivor annuity, payments under that
annuity must not be less than the payments which would have
been made to the Spouse under the Qualified Joint and
Survivor Annuity if the Participant had retired on the day
before his or her death. Any election under this provision
will be in writing and may be changed by the Participant at
any time. The election period begins on the later of (1) the
90th day before the Participant attains Qualified Early
Retirement Age, or (2) the date on which Plan participation
begins, and ends on the date the Participant terminates
employment with the Employer.
(c) For purposes of Section 6.06(F)(4):
(1) Qualified Early Retirement Age is the latest of:
a. The earliest date, under the Plan, on which the Participant
may elect or receive retirement benefits;
b. The first day of the 120th month beginning before the
Participant attains Normal Retirement Age; or
c. The date the Participant begins participation in the Plan.
(2) Qualified Joint and Survivor Annuity is
22
an annuity for the life of the Participant with a
survivor annuity for life of the spouse as described in
Section 6.06(D) (4) of this Article.
5. Neither the consent of the Participant nor the
Participant's Spouse is required to the extent that a
distribution is required to satisfy Section 401(a)(9)
or Section 415 of the Code.
G. Safe Harbor Rules
1. This Section shall apply to a Participant in a profit-
sharing plan, and to any distribution, made on or after
the first day of the first Plan Year beginning after
December 31, 1988, from or under a separate account
attributable solely to "accumulated deductible employee
contributions," as defined in Section 72(o)(5)(B) of
the Code, and maintained on behalf of a Participant in
a money purchase pension plan, (including a target
benefit plan) if the following conditions are
satisfied: (1) the Participant does not or cannot elect
payments in the form of a life annuity; and (2) on the
death of a Participant, the Participant's Vested
account balance will be paid to the Participant's
surviving spouse, but if there is no surviving spouse,
or if the surviving spouse has consented in a manner
conforming to a qualified election, then to the
Participant's Beneficiary. The surviving spouse may
elect to have distribution of the Vested account
balance commence within the 90-day period following the
date of the Participant's death. The account balance
shall be adjusted for gains or losses occurring after
the Participant's death in accordance with the
provisions of the Plan governing the adjustment of
account balances for other types of distributions. This
Section shall not be operative with respect to a
Participant in a profit-sharing plan if the plan is a
direct or indirect transferee of a defined benefit
plan, money purchase plan, a target benefit plan, stock
bonus, or profit-sharing plan which is subject to the
survivor annuity requirements of Section 401(a)(11) and
Section 417 of the Code. If this Section is operative,
then the other provisions of Section 6.06, other than
Section 6.06(F), shall be inoperative.
2. The Participant may waive the spousal death benefit
described in this Section at any time provided that no
such waiver shall be effective unless it satisfies the
conditions of subsection 6.06(D)(3) (other than the
notification requirement referred to therein) that
would apply to the Participant's waiver of the
qualified preretirement survivor annuity.
3. For purposes of this Section 6.06(G), "Vested account
balance" shall mean, in the case of a money purchase
pension plan or a target benefit plan, the
Participant's separate account balance attributable
solely to accumulated deductible employee contributions
within the meaning of Section 72(o)(5)(B) of the Code.
In the case of a profit-sharing plan, "Vested account
balance" shall have the same meaning as provided in
sub-section 6.06(D)(7).
6.07 DISTRIBUTION REQUIREMENTS
A. General Rules -
1. The requirements of this Section 6.07 apply to any
distribution of a Participant's interest in the Plan
and control over any inconsistent provisions of this
Plan. Unless otherwise indicated, the provisions of
this Section 6.07 apply to calendar years beginning
after December 31, 1984.
2. All distributions required under this Section 6.07 are
determined and made accordIng to the requirements of
Section 401(a)(9) of the Code and any applicable
Treasury Regulations. These requirements are
incorporated into this Plan by reference, to the extent
not fully reflected below.
B. Required Beginning Date - The entire interest of a
Participant must be distributed or begin to be distributed
no later than the Participant's "Required Beginning Date"
(as defined in Section 6.07(F)(5)).
C. Limits on Distribution Periods - As of the first
distribution calendar year, distributions, if not made in a
single sum, may only be made over one (or a combination) of
the following periods:
1. The life of the Participant;
2. The life of the Participant and his or her Beneficiary;
3. A specified period not longer than the "Life
Expectancy" (as defined in Section 6.07('P)(3)) of the
Participant; or
4. A specified period certain not longer than the joint
and last survivor expectancy of the Participant and his
or her Beneficiary.
D. Determination of Amount to be Distributed Each Year -If the
Participant's interest in the Plan is not being distributed
in a single sum, the following minimum distribution rules
apply on or after the Required Beginning Date:
1. Individual Account. -
(a) If a "Participant's Benefit" (as defined in
Section 6.07(F)(4)) is to be distributed over (1)
a period not longer than his or her life
Expectancy or the joint life and last survivor
expectancy of the Participant and his or her
Beneficiary or (2) a period not longer than the
Life Expectancy of the Beneficiary, the amount
required to be distributed for each calendar year,
beginning with distributions for the first
"Distribution Calendar Year", (as defined in
Section 6.07(F)(2)), must be at least equal to the
amount determined by dividing the balance credited
to his or her Individual Account by the
"Applicable Life Expectancy" (as defined in
Section 6.07(F)(1)).
(b) For calendar years beginning before January 1,
1989, if the Participant's Spouse is not the
designated Beneficiary, the method of distribution
selected must ensure that at least 50% of the
present value of the amount available for
distribution is paid within the life expectancy of
the Participant.
(c) For calendar years beginning after December
31,1988, the amount to be distributed each year,
beginning with distributions for the first
23
Distribution Calendar Year must not be less than
the amount determined by dividing the
Participant's Benefit by the lesser of (1) the
Applicable Life Expectancy or (2) if his or her
Spouse is not the Beneficiary, the appropriate
divisor from the table contained in Proposed
Treasury Regulation Section 1.401(a)(9)-2, Q&A-4.
Distributions after the death of the Participant
are distributed using the Applicable Life
Expectancy in Section 6.07(D)(1)(a) as the
relevant divisor without regard to the Proposed
Treasury Regulation.
(d) The minimum distribution required for the
Participant's first Distribution Calendar Year
must be made on or before the Participant's
Required Beginning Date. The minimum distribution
for other calendar years, including the minimum
distribution for the Distribution Calendar Year in
which the Employee's Required Beginning Date
falls, must be made on or before December 31 of
that Distribution Calendar Year.
2. Other Forms - If the Participant's Benefit is
distributed in the form of an annuity purchased from an
insurance company, distributions are made according to
the requirements of Section 401(a)(9) of the Code.
E. Death Distribution Provisions -
1. Distribution Beginning Before Death - If the
Participant dies after distribution of his or her Plan
interest has commenced, the remaining portion of that
interest must continue to be distributed at least as
rapidly as under the method of distribution being used
before the Participant's death.
2. Distribution Beginning After Death - If the Participant
dies before distribution of his or her Plan interest
begins, distribution of the Participant's entire Plan
interest must be completed by December 31 of the
calendar year containing the fifth anniversary of his
or her death, except to the extent that an election is
made to receive distributions under (a) or (b) below:
(a) If any portion of the Participant's interest is
payable to a Beneficiary, distributions may be
made over the life or over a period certain not
greater than the life expectancy of the
Beneficiary beginning by December 31 of the
calendar year immediately following the calendar
year in which the Participant died;
(b) If the Beneficiary is the Participant's surviving
spouse, distributions are not required to begin
under (a) above earlier than the later of (1)
December 31 of the calendar year immediately
following the calendar year in which the
Participant dies or (2) December 31 of the
calendar year in which the Participant would have
attained age 70-1/2.
If the Participant has not made an election under this
Section 6.07(E)(2) by the time of his or her death, the
Beneficiary must elect the method of distribution no
later than the earlier of (1) December 31 of the
calendar year in which distributions are to begin under
this Section 6.07(E)(2), or (2) December 31 of the
calendar year which contains the fifth anniversary of
the Participant's date of death. If the Participant has
no Beneficiary, or if that Beneficiary does not elect a
method of distribution, the distribution of the
Participant's entire Plan interest must be completed by
December 31 of the calendar year containing the fifth
anniversary of the Participant's death.
3. For purposes of Section 6.07(E)(2), if the surviving
spouse dies after the Participant, but before payments
to that spouse begin, the provisions of Section
6.07(E)(2), with the exception of paragraph (b), apply
as if the surviving spouse were the Participant.
4. For purposes of this Section 6.07(E), distribution of a
Participant's Plan interest is considered to begin on
the Participant's Required Beginning Date (or, if
Section 6.07(E)(3) above is applicable, the date
distribution is required to begin to the surviving
spouse under Section 6.07(E)(2)). If a Participant
begins receiving an irrevocable distribution in the
form of an annuity before the Required Beginning Date,
the date that the distribution is considered to begin
is the date the distribution actually commences.
F. Definitions -
1. Applicable Life Expectancy: The life expectancy (or
joint and last survivor expectancy) calculated using
the age of the Participant (or Beneficiary), as of the
Participant's (or Beneficiary's) birthday in the
applicable calendar year, reduced by one for each
calendar year which has elapsed since the date life
expectancy was first calculated. If life expectancy is
being recalculated, the Applicable Life Expectancy is
the recalculated life expectancy. The "Applicable
Calendar Year" is the first Distribution Calendar Year,
and if life expectancy is being recalculated, the
following calendar year.
2. Distribution Calendar Year: A calendar year for which a
minimum distribution is required. For distributions
commencing before the Participant's death, the first
"Distribution Calendar Year" is the calendar year
immediately preceding the calendar year containing the
Participant's Required Beginning Date. For
distributions commencing after the Participant's death,
the first "Distribution Calendar Year" is the calendar
year in which distributions are required to commence
under Section 6.07(E).
3. Life Expectancy: Life expectancy and joint and last
survivor expectancy are computed using the expected
return multiples in Tables V and VI of Treasury
Regulation Section 1.72-9.
Unless the Participant (or spouse, under Section
6.07(E)(2)(b)) otherwise elects by the time
distributions are required to commence, life
expectancies are recalculated annually. That election
is irrevocable for the Participant (or spouse) and
applies to all subsequent years. The life expectancy of
a nonspouse Beneficiary may not be recalculated.
4. Participant's Benefit:
(a) The account balance as of the last Valuation Date
in the valuation calendar year (that is, the
calendar year before the Distribution Calendar
Year), increased by the amount of
24
any contributions or Forfeitures allocated to the
Participant's account balance as of dates in the
valuation calendar year after the valuation date
and decreased by distributions made in the
valuation calendar year after the Valuation Date.
(b) Exception For Second Distribution Calendar Year -
For purposes of paragraph (a) above, if any
portion of the minimum distribution for the first
Distribution Calendar Year is made in the second
Distribution Calendar Year on or before the
Required Beginning Date, the amount of the minimum
distribution made in the second Distribution
Calendar Year is treated as if it had been made in
the previous Distribution Calendar Year.
5. Required Beginning Date:
(a) General Rule - The "Required Beginning Date" of a
Participant is the April 1 of the calendar year
next following the calendar year in which the
Participant attains age 70-1/2.
(b) Transition Rules - The Required Beginning Date of
a Participant who attains age 70-1/2 before
January 1, 1988, is determined as follows:
(1) Non 5% Owners - The Required Beginning Date
of a Participant who is not a "5% Owner" (as
defined in Section 6.07(F)(5)(c)) is the
April 1 of the calendar year next following
the calendar year in which he or she retires
or attains age 70-1/2; whichever is later.
(2) 5% Owners - The Required Beginning Date of a
Participant who is a 5% Owner during any year
beginning after December 31,1979, is the
April 1 next following the later of:
a. The calendar year in which the
Participant attains age 70-1/2; or
b. The earlier of (i) the calendar year
with or within which ends the Plan Year
in which the Participant becomes a 5%
Owner or (ii) the calendar year in which
the Participant retires.
The Required Beginning Date of a Participant who
is not a 5% Owner, who attains age 70-1/2 during
1988 and who has not retired as of January 1,
1989, is April 1, 1990.
(c) 5% Owner - A Participant is treated as a 5% Owner
for purposes of this Section 6.07(F)(5) if he or
she is a "5% Owner" as defined in Section
416(i)(1)(B)(i) of the Code (without regard to
whether the Plan is a Top-Heavy Plan) at any time
during the Plan Year ending with or within the
calendar year in which the Participant attains age
66-1/2 or any subsequent Plan Year.
(d) Once distributions have begun to a 5% Owner under
this Section 6.07(F)(5) they must continue to be
distributed, even if the Participant ceases to be
a 5% Owner in a subsequent Plan Year.
G. Pre-1984 Elections
1. Regardless of the other requirements of this Section
6.07, a Plan distribution on behalf of any Participant,
including a Participant who is a 5% Owner; may be
deferred if the following requirements are met:
(a) The distribution by the Plan is one which would
not have disqualified the Plan under Section
401(a)(9) of the Code as in effect prior to
amendment by the Deficit Reduction Act of 1984;
(b) The distribution follows a method of distribution
designated by the Participant whose interest in
the Plan is being distributed or, if the
Participant is deceased, by the Participant's
Beneficiary;
(c) That designation was in writing, signed by the
Participant or the Beneficiary, and made before
January 1, 1984;
(d) The Participant had accrued a benefit under the
Plan as of December 31, 1983; and
(e) The method of distribution designated by the
Participant or the Beneficiary specifies the time
at which distribution begins, the period over
which distributions will be made, and, in the case
of any distribution to be made upon the
Participant's death, lists the Beneficiaries of
the Participant in order of priority.
2. A distribution upon the Participant's death will not be
covered by this transitional rule unless the
information in the designation contains the required
information described above for distributions to be
made upon the death of the Participant.
3. For any distribution beginning before January 1, 1984,
but continuing after December 31, 1983, the
Participant, or the Beneficiary to whom the
distribution is being made, is presumed to have
designated the method of distribution under which the
distribution is being made if the method of
distribution was specified in writing and the
distribution satisfies the requirements in Sections
6.07(G)(1)(a) and (e).
4. If a designation is revoked, any subsequent
distribution must satisfy the requirements of Section
401(a)(9) of the Code. If a designation is revoked
after the date distributions are required to begin, the
Plan must distribute, by the end of the calendar year
after the calendar year in which the revocation occurs,
the total amount not yet distributed that would have
been distributed to satisfy Section 401(a)(9) of the
Code if not for the pre-1984 designation. For calendar
years beginning after December 31, 1988, these
distributions must meet the minimum distribution
incidental benefit requirements under Proposed Treasury
Regulation Section 1.401(a)(9)-2. Any changes in the
designation will generally be considered to revoke the
designation. However, a mere substitution or addition
of another Beneficiary (not named in the designation)
under the designation will not be considered a
revocation of the designation, if the substitution or
addition does not change the period
25
over which distributions are to be made under the
designation, directly or indirectly (for example, by
changing the relevant measuring life). If an amount is
transferred or rolled over from one plan to another
plan, the rules under Proposed Treasury Regulation
Section 1.401(a)(9)-2, Q&A J-2 and Q&A J-3 will apply.
H. Distributions Pursuant to QDRO's - Notwithstanding any other
provision of this Plan to the contrary, Plan benefits
awarded to an "alternate payee" (as defined in Section
414(p)(8) of the Code) under a "domestic relations order"
(as defined in Section 414(p)(1)(B) of the Code) determined
by the Plan Administrator to be a "qualified domestic
relations order" (as defined in Section 414(p)(1)(A) of the
Code) may be distributed to the alternate payee at any time
under the qualified domestic relations order without regard
to any limitation in the Plan as to the time when these
benefits would otherwise have been distributable.
6.08 ANNUITY CONTRACTS
Any annuity contract distributed under the Plan (if permitted or
required by this Article 6) must be nontransferable. The terms of any
annuity contract purchased and distributed by the Plan to a
Participant or spouse must comply with the requirements of the Plan.
6.09 LOANS TO PARTICIPANTS
If the Adoption Agreement so indicates, a Participant may receive a
loan from the Fund, under the following rules:
A. Loans are made available to all Participants and
Beneficiaries on a reasonably equivalent basis;
B. Loans are not to be made available to Highly Compensated
Employees in amounts greater than the amounts made available
to other Employees;
C. Loans must be adequately secured and bear interest at a rate
consistent with that which would be charged by commercial
lenders for loans to unrelated parties made for similar
purposes;
D. A Participant must obtain the consent of his or her spouse,
if any, to the use of the Participant's Individual Account
as security for the loan. The spouse's consent must be
obtained no earlier than 90 days before the date on which
the loan is to be so secured. The consent must be in
writing, must acknowledge the effect of the loan, and must
be witnessed by a Plan representative or notary public. The
consent is binding on the consenting spouse and on any
future spouse with respect to that loan. A new consent is
required if the Participant's Individual Account is used for
renegotiation, extension, renewal, or other revision of the
loan;
E. If there is a default on the loan, foreclosure on the note
and attachment of security will not occur until a
distributable event occurs under the Plan;
F. No loans will be made to any shareholder-employee or Owner-
Employee. (A shareholder-employee is an employee or officer
of an electing small business (Subchapter S) corporation who
owns (or is considered as owning within the meaning of
Section 319(a)(1) of the Code), on any day during the
taxable year of that corporation, more than 5% of the out-
standing stock of the corporation); and
G. Loans are not made to any individuals who are not "parties
in interest" (as defined in ERISA) with respect to the
Employer, unless provided otherwise in the Adoption
Agreement.
If the loan was obtained with spousal consent as described in (E)
above, then the portion of the Participant's Vested Individual Account
used as a security interest for that loan reduces the amount of the
balance to the Individual Account payable at the time of death or
distribution, but only if the reduction is used as repayment of the
loan. If less than 100% of the Participant's Vested Individual Account
(ignoring the preceding sentence) is payable to the Participant's
surviving spouse upon the Participant's death, then the balance to the
Individual Account is adjusted by first reducing the Vested balance to
the Individual Account by the amount of the security used as repayment
for the loan, and then determining the benefit payable to the
surviving spouse.
No amount can be loaned to a Participant from the Plan if that amount
when added to the Participant's outstanding balance of all other
Employer qualified plan loans to the Participant would be greater than
the lesser of (a) $50,000 reduced by the excess (if any) of the
highest outstanding balance of Employer qualified plan loans during
the one-year period ending on the day before the loan is made, over
the Participant's outstanding balance of Employer qualified plan loans
on the date the loan from the Plan is made, or (b) the greater of one-
half of the value of the Vested Individual Account of the Participant
or $10,000. For this purpose, all loans from all qualified plans of
the Employer and other members of a group of employers described in
Sections 414(b), 414(c) and 414(m) of the Code are aggregated. The
loan terms must require that the loan repayment (principal and
interest) be amortized in level payments, at least quarterly, over a
period not longer than 5 years from the date on which the loan is
made, unless the loan is used to acquire a dwelling unit which, within
a reasonable time (determined at the time the loan is made) will be
used as the Participant's principal residence, in which case the loan
must be amortized in level payments, at least quarterly, over a period
which is longer than 5 years, as determined by the Plan Administrator
on a uniform and nondiscriminatory basis. An assignment or pledge of
any portion of the Participant's interest in the Plan and a loan,
pledge, or assignment with respect to any insurance contract purchased
under the Plan, is treated as a loan under this paragraph.
The Plan Administrator administers the loan program in accordance with
uniform and nondiscriminatory rules and regulations.
6.10 DIRECT ROLLOVERS
A. This Section 6.10 applies to Plan distributions made on or
after January 1, 1993. Notwithstanding any Plan provision to
the contrary that would limit a "Distributee's" (as defined
in Section 6.10(B)(3)) distribution election under the Plan,
a Distributee may elect, at the time and in the manner
prescribed by the Plan Administrator, to have any portion of
an "Eligible Rollover Distribution" (as defined in Section
6.10(B)(1)) of at least $500 paid directly to an "Eligible
Retirement Plan" (as defined in Section 6.10(B)(2))
specified by the Distributee in a "Direct Rollover" (as
defined in Section 6.10(B)(4)).
B. Definitions -
1. Eligible Rollover Distribution: Any distribution of all
or any portion of the balance under the Plan to the
credit of the Distributee, except that an Eligible
Rollover Distribution does not include:
(a) Any distribution that is one of a series of
substantially equal periodic payments (not
26
less frequently than annually) made for the life
(or life expectancy) of the Distributee or the
joint lives (or joint life expectancies) of the
Distributee and the Distributee's Beneficiary, or
for a specified period of 10 years or more;
(b) Any distribution to the extent required under
Section 401(a)(9) of the Code;
(c) The portion of any other distribution(s) that is
not includible in gross income (determined without
regard to the exclusion for net unrealized
appreciation with respect to Employer securities);
and
(d) Any other distribution(s) that is reasonably
expected to total less than $200 per year.
2. Eligible Retirement Plan:
(a) An individual retirement account described in
Section 408(a) of the Code or an individual
retirement annuity described in Section 408(b) of
the Code;
(b) An individual annuity plan described in Section
403(a) of the Code; or
(c) A qualified plan described in Section 401(a) of
the Code; that accepts the Distributee's Eligible
Rollover distribution. For an Eligible Rollover
Distribution to a Participant's surviving spouse,
an "Eligible Retirement Plan" is limited to an
individual retirement account or individual
retirement annuity only.
3. Distributee: A Distributee includes an Employee or
former Employee. In addition, the Employee's or former
Employee's surviving spouse and the Employee's or
former Employee's spouse or former spouse who is the
alternate payee under a "qualified domestic relations
order" (as defined in Section 414(p) of the Code") are
Distributees with regard to the interest of the spouse
or former spouse.
4. Direct Rollover: A payment by the Plan to the Eligible
Retirement Plan specified by the Distributee.
27
ARTICLE SEVEN--CLAIMS PROCEDURE
7.01 FILING A CLAIM FOR PLAN DISTRIBUTIONS
A Participant or Beneficiary must make a claim for a distribution of
(or loan from) the Vested portion of his or her Individual Account and
any benefits to which he or she believes he or she is entitled under
the Plan by filing a written request with the Plan Administrator on a
form to be furnished by the Plan Administrator for that purpose. The
written request must specify the basis of the claim. The Plan
Administrator is authorized to conduct any examinations it reasonably
believes are necessary or appropriate to examine the claim.
7.02 DENIAL OF CLAIM
Whenever a claim for a Plan distribution (or loan) by any Participant
or Beneficiary is completely or partly denied, the Plan Administrator
must furnish a written notice of the denial to the Participant or
Beneficiary within 60 days of the original filing date of the claim.
This notice must include the specific reasons for the denial, specific
reference to the Plan provisions on which the denial is based, a
description of any additional information or material needed to
perfect the claim, an explanation of why additional information or
material is necessary and an explanation of the procedures for appeal.
If the Plan Administrator fails to respond to a claim within 90 days
after its receipt, for purposes of Section 7.03 the claim will be
deemed to have been denied.
7.03 REQUEST FOR REVIEW
Any Participant or Beneficiary whose claim under Section 7.02 has been
denied has 60 days from receipt of the denial notice to file a written
application for review by the Employer's managing body. The
Participant or Beneficiary may request that the review be in the
nature of a hearing. The Participant or Beneficiary has the right to
representation, to review the relevant documents and to submit
comments in writing. The Employer's managing body must issue a final
decision on that review within 60 days after receipt of the written
application for review.
28
ARTICLE EIGHT--PLAN ADMINISTRATOR
8.01 EMPLOYER IS THE PLAN ADMINISTRATOR
A. The Employer is the Plan Administrator unless the Employer
properly names a person or persons other than the Employer
as the Plan Administrator and notifies the Trustee. The
Employer is also the Plan Administrator if the named person
or persons cease to be the Plan Administrator or refuse to
perform the functions of the Plan Administrator. The Plan
Administrator is a "named fiduciary" of the Plan (within the
meaning of Section 402(a) of ERISA) with respect to the
administration of the Plan.
B. If the Employer names a person or persons other than the
Employer as Plan Administrator, that person or persons
serves at the pleasure of the Employer and under whatever
procedures are set by the Employer's managing body. Each
Plan Administrator must be bonded, to the extent required by
law.
8.02 POWERS AND DUTIES OF THE PLAN ADMINISTRATOR
A. The Plan Administrator may, by appointment, allocate the
duties of the Plan Administrator among several individuals
or entities, but those appointments are not effective until
the designated party accepts the appointment in writing.
B. The Plan Administrator has the exclusive authority to
control and manage the operation and administration of the
Plan. The Plan Administrator must administer the Plan for
the exclusive benefit of the Participants and their
Beneficiaries in accordance with the specific terms of the
Plan.
C. The Plan Administrator is charged with the duties of
the general administration of the Plan, including, but
not limited to, the following:
1. To determine all questions of interpretation or policy
in a manner consistent with the Plan's documents, and
the Plan Administrator's good faith construction or
determination is conclusive and binding on all persons.
Any interpretation or construction must be
nondiscriminatory and consistent with the intent that
the Plan should be a qualified plan under Section
401(a) of the Code, and must comply with ERISA;
2. To determine all questions relating to the eligibility
of Employees to become or remain Participants;
3. To compute the amounts necessary or desirable to be
contributed to the Plan;
4. To compute the amount and kind of benefits to which a
Participant or Beneficiary is entitled under the Plan
and to direct the Trustee with respect to all
disbursements under the Plan, and when requested by the
Trustee, to furnish the Trustee with instructions, in
writing, on matters pertaining to the Plan and the
Trustee may rely and act thereon;
5. To maintain all records necessary for the
administration of the Plan;
6. To be responsible for preparing and filing any
disclosure and tax forms as may be required from time-
to-time under the Code, ERISA or other applicable law
by the Secretary of Labor or the Secretary of the
Treasury with respect to the Plan; and
7. To furnish each Employee, Participant or Beneficiary
any notice, information and report under any
circumstance required under the Code, ERISA or other
applicable law.
D. The Plan Administrator has all of the powers necessary or
appropriate to accomplish its duties under the Plan,
including, but not limited to, the following:
1. To appoint and retain any persons as may be necessary
or appropriate to carry out the functions of the Plan
Administrator;
2. To appoint and retain counsel, specialists or other
persons that the Plan Administrator deems necessary or
advisable in the administration of the Plan;
3. To resolve all questions relating to the administration
of the Plan;
4. To establish any uniform and nondiscriminatory rules
which the Plan Administrator deems necessary to carry
out the terms of the Plan;
5. To make any adjustments in a uniform and
nondiscriminatory manner which the Plan Administrator
deems necessary to correct any arithmetical or
accounting errors which may have been made for any Plan
Year; and
6. To correct any defect or omission or reconcile any
inconsistency in any manner and to any extent that the
Plan Administrator deems necessary or appropriate to
carry out the purposes of the Plan.
8.03 EXPENSES AND COMPENSATION
All reasonable expenses of Plan administration including, but not
limited to, those involved in retaining necessary professional
assistance may be paid from the assets of the Fund. Alternatively, the
Employer may, in its discretion, pay those expenses. The Employer will
furnish the Plan Administrator with any clerical and other assistance
as the Plan Administrator may need in the performance of its duties.
8.04 INFORMATION FROM EMPLOYER
To enable the Plan Administrator to perform its duties, full and
timely information must be provided to the Plan Administrator (or its
designated agents) on all matters relating to the Compensation of
Participants, their regular employment, retirement, death, Disability
or Termination of Employment, and any other pertinent facts as the
Plan Administrator (or its agents) may require. The Plan Administrator
will advise the Trustee of any of the foregoing facts as may be
pertinent to the Trustee's duties under the Plan. The Plan
Administrator (or its agents) is entitled to rely on any information
supplied by the Employer and will have no duty or responsibility to
verify that information.
29
ARTICLE NINE--AMENDMENT AND TERMINATION
9.01 RIGHT OF PROTOTYPE SPONSOR TO AMEND THE PLAN
A. The Employer, by adopting the Plan, has delegated to the
Prototype Sponsor the power, but not the duty, to amend the
Plan without any further action or consent of the Employer.
Specifically, Plan amendments may be made unilaterally by
the Prototype Sponsor. However, the Prototype Sponsor has no
obligation to amend the Plan documents and the Employer
expressly waives any rights or claims against the Prototype
Sponsor for not exercising this power to amend. Each
Employer has an obligation, and agrees, to keep the
Prototype Sponsor informed as to its current address, and
any Employer who ceases using the services or facilities of
the Prototype Sponsor in connection with the investment of
the assets of its Plan will be deemed to have abandoned this
Plan.
B. The Prototype Sponsor may amend the Plan by giving written
notice to the Employer of the amendment to be made, which
notice can be given in any form and by any methods, such as
by mail or by including a notice in materials regularly
distributed by the Prototype Sponsor to customers generally.
The notice must include the text of the amendment and the
date the amendment is to be effective. The amendment is
effective after that written notice, unless within the 30-
day period after the notice is provided, or within any
shorter period that the notice may specify, the Employer
gives the Prototype Sponsor written notice of its refusal to
consent to the amendment. That written notice of its refusal
has the effect of withdrawing the Plan as a prototype plan
and causes the Plan to be considered an individually-
designed plan. The right of the Prototype Sponsor to cause
the Plan to be amended terminates if the Plan ceases to be a
prototype plan as provided in this or any other Plan
Section.
9.02 RIGHT OF EMPLOYER TO AMEND THE PLAN
The Employer may (1) change the choice of options in the Adoption
Agreement, (2) add overriding language in the Adoption Agreement when
that language is necessary to satisfy Section 415 or Section 416 of
the Code because of the required aggregation of multiple plans, and
(3) add any model amendments published by the Internal Revenue Service
that specifically provide that their adoption will not cause the Plan
to be treated as individually-designed. An Employer that amends the
Plan for any other reason, including a waiver of the minimum funding
requirement under Section 412(d) of the Code, will no longer
participate in this prototype plan and will be considered to have an
individually-designed plan. The Employer amends this Plan by action of
its managing body sufficient to be the binding act of the Employer
under applicable State law.
An Employer that wishes to amend the Plan to change the options it has
chosen in the Adoption Agreement must complete a new Adoption
Agreement. That amendment becomes effective upon execution by the
Employer.
The Employer further reserves the right to replace the Plan in its
entirety by adopting a replacement plan.
9.03 LIMITATION ON POWER TO AMEND
No amendment to the Plan may have the effect of decreasing a
Participant's accrued benefit. However, a Participant's Individual
Account may be reduced to the extent permitted under Section 412(c)(8)
of the Code. Any Plan amendment which has the effect of decreasing a
Participant's Individual Account or eliminating an optional form of
benefit (relating to service before the amendment) is treated as
reducing an accrued benefit. If the Plan's vesting schedule is
amended, in the case of an Employee who is a Participant as of the
later of the date the amendment is adopted or the date it becomes
effective, the Vested percentage (determined as of that date) of the
Participant's Individual Account derived from Employer Contributions
will not be less than the percentage computed under the Plan without
regard to the amendment.
9.04 AMENDMENT OF VESTING SCHEDULE
If the Plan's vesting schedule is amended, or the Plan is amended in
any way that directly or indirectly affects the computation of the
Participant's Vested percentage, or if the Plan is treated as if it
were amended by an automatic change to or from a top-heavy vesting
schedule, each Participant with at least 3 Years of Vesting Service
may elect, within the time identified below, to have his or her Vested
percentage computed under the Plan as if the amendment had not been
adopted.
For Participants who do not have at least 1 Hour of Service in any
Plan Year beginning after December 31, 1988, the preceding sentence is
applied by substituting "5 Years of Vesting Service" for "3 Years of
Vesting Service" where that language appears.
The period during which the election may be made begins with the date
the amendment is adopted or deemed to be made and ends at the latest
of:
A. 60 days after the amendment is adopted;
B. 60 days after the amendment becomes effective; or
C. 60 days after the Participant is issued written notice of
the amendment by the Employer or Plan Administrator.
9.05 PERMANENCY
The Employer expects to continue this Plan and make the necessary
contributions to it indefinitely, but reserves the right to terminate
the Plan or any of its features.
9.06 PLAN TERMINATION PROCEDURES
The Employer may terminate the Plan at any time by appropriate action
of its managing body. The termination becomes effective on the date
specified by the Employer. Until all of the assets have been
distributed from the Fund, the Employer must keep the Plan in
compliance with current laws and regulations by (a) making appropriate
amendments to the Plan and (b) taking other measures that may be
required.
9.07 PLAN CONTINUED BY SUCCESSOR EMPLOYER
Notwithstanding the preceding Section 9.06, a successor of the
Employer may continue the Plan and be substituted in the place of the
present Employer. The successor and the present Employer (or, if
deceased, the executor of the estate of a deceased Self-Employed
Individual who was the Employer) must execute a written instrument
authorizing that substitution and the successor must complete and sign
a new Adoption Agreement.
9.08 FAILURE OF PLAN QUALIFICATION
If the Plan fails to satisfy the qualification requirements under
Section 401(a) of the Code, the Plan will no longer be considered to
be part of a prototype plan, and the Employer may no longer
participate under this prototype. If that happens, the Plan will be
considered an individually-designed plan.
30
ARTICLE TEN-MISCELLANEOUS
10.01 STATE COMMUNITY PROPERTY LAWS
The terms and conditions of this Plan apply without regard to the
community property laws of any State.
10.02 HEADINGS
The headings of the Plan are only for convenience and are to be
ignored in any construction of the Plan's terms.
10.03 GENDER AND NUMBER
Words used in the masculine gender should be read as if they were also
used in the feminine gender in all cases, except where the context
clearly indicates otherwise, and words used in the singular form
should be read as if they were also used in the plural form, except
where the context clearly indicates otherwise.
10.04 PLAN MERGER OR CONSOLIDATION
If there is a merger or consolidation of the Plan with, or transfer of
assets or liabilities of the Plan to, any other plan, each Participant
must be entitled to receive benefits immediately after the merger,
consolidation, or transfer (as if the Plan had then terminated) equal
to or greater than the benefits he or she would have been entitled to
receive immediately before the merger, consolidation, or transfer (if
the Plan had then terminated). The Trustee has the authority to enter
into merger agreements or agreements to transfer directly the assets
of this Plan but only if those agreements are in accordance with the
terms and provisions of this Plan and made with trustees or custodians
of other retirement plans described in Section 401(a) of the Code.
10.05 TERMS OF EMPLOYMENT
Nothing in this Plan gives an Employee, whether or not a Participant,
any right to be employed by the Employer or to continue employment
with the Employer, and nothing in this Plan limits the Employer's
right to discharge an Employee.
10.06 AGREEMENT BINDS HEIRS, ETC.
This Plan binds the heirs, executors, administrators, successors and
assigns, as those terms apply to any and all Plan parties, present and
future.
10.07 DETERMINATION OF TOP-HEAVY STATUS
A. For any Plan Year beginning after December 31, 1983, this
Plan is a Top-Heavy Plan if any of the following conditions
exist:
1. If the "Top-Heavy Ratio" (as defined in Section
10.07(C)) for this Plan exceeds 60% and this Plan is
not part of any "Required Aggregation Group" (as
defined in Section 10.07(D)(1)) or "Permissive
Aggregation Group" (as defined in Section 10.07(D)(2));
2. If this Plan is part of a Required Aggregation Group
but not part of a Permissive Aggregation Group and the
Top-Heavy Ratio for the Required Aggregation Group
exceeds 60%; or
3. If this Plan is a part of a Required Aggregation Group
and part of a Permissive Aggregation Group and the Top-
Heavy Ratio for the Permissive Aggregation Group
exceeds 60%.
B. Key Employee - Any Employee or former Employee (and the
Beneficiaries of that Employee) who at any time during the
"determination period" (as defined below) was an officer of
an Employer if that individual's "annual compensation" (as
defined below) exceeds 50% of the dollar limit under Section
415(b)(1)(A) of the Code, an owner (or considered an owner
under Section 318 of the Code) of one of the 10 largest
interests in the Employer if the individual's compensation
exceeds 100% of the dollar limitation under Section
415(c)(1)(A) of the Code, a 5% Owner of the Employer, or a
1% owner of the Employer who has annual compensation in
excess of $150,000. "Annual compensation" means
"compensation," within the meaning of Section 3.05(E)(2) of
the Plan, but including amounts contributed by the Employer
under a salary reduction agreement which are excludible from
the Employee's gross income under Section 125, Section
402(e)(3), Section 402(h)(1)(B) or Section 403(b) of the
Code. The "determination period" is the Plan Year containing
the "Determination Date" (as defined in Section 10.07(D)(3))
and the 4 preceding Plan Years.
The determination of who is a Key Employee is made under
Section 416(i)(1) of the Code and its Treasury Regulations.
C. Top-Heavy Ratio -
1. If the Employer maintains one or more defined
contribution plans (including any simplified employee
pension plan) and the Employer has not maintained any
defined benefit plan which during the 5-year period
ending on the Determination Date(s) has or has had
accrued benefits, the Top-Heavy Ratio for this Plan
alone or for the Required or Permissive Aggregation
Group (as appropriate) is a fraction, the numerator of
which is the sum of the account balances of all Key
Employees as of the Determination Date(s) (including
any part of any account balance distributed in the 5-
year period ending on the Determination Date(s)), and
the denominator of which is the sum of all account
balances (including any part of any account balance
distributed in the 5-year period ending on the
Determination Date(s)), both computed in accordance
with Section 416 of the Code and its Treasury
Regulations. Both the numerator and the denominator of
the Top-Heavy Ratio are increased to reflect any
contribution not actually made as of the Determination
Date, but which is required to be taken into account on
that Date under Section 416 of the Code and its
Treasury Regulations.
2. If the Employer maintains one or more defined
contribution plans (including any simplified employee
pension plan) and the Employer maintains or has
maintained one or more defined benefit plans which
during the 5-year period ending on the Determination
Date(s) has or has had any accrued benefits, the Top-
Heavy Ratio for any Required or Permissive Aggregation
Group (as appropriate) is a fraction, the numerator of
which is the sum of the account balances under the
aggregated defined contribution plan or plans for all
Key Employees, determined in accordance with (1) above,
and the "Present Value" (as defined in Section
10.07(D)(5)) of accrued benefits under the aggregated
defined benefit plan or plans for all Key Employees as
of the Determination Date(s), and the denominator of
which is the sum of the account balances under the
aggregated defined contribution plan or plans for all
Participants, determined in accor-
31
dance with (1) above, and the present value of accrued
benefits under the defined benefit plan or plans for
all Participants as of the Determination Date(s), all
determined in accordance with Section 416 of the Code
and its Treasury Regulations. The accrued benefits
under a defined benefit plan in both the numerator and
denominator of the Top-Heavy Ratio are increased for
any distribution of an accrued benefit made in the 5-
year period ending on the Determination Date.
3. For purposes of (1) and (2) above, the value of account
balances and the present value of accrued benefits are
determined as of the most recent valuation date that
falls in or ends with the 12-month period ending on the
Determination Date, except as provided in Section 416
of the Code and its Treasury Regulations for the first
and second plan years of a defined benefit plan. The
account balances and accrued benefits of a participant
(a) who is not a Key Employee but who was a Key
Employee in a prior year, or (b) who has not been
credited with at least one Hour of Service with any
employer maintaining the plan at any time during the 5-
year period ending on the Determination Date will be
disregarded. The calculation of the Top-Heavy Ratio,
and the extent to which distributions, rollovers, and
transfers are taken into account are made under Section
416 of the Code and its Treasury Regulations.
Deductible Employee contributions are not taken into
account in computing the Top-Heavy Ratio. When
aggregating plans the value of account balances and
accrued benefits is calculated with reference to the
Determination Dates that fall in the same calendar
year.
The accrued benefit of a participant other than a Key Employee is
determined under (a) the method, if any, that uniformly applies for
accrual purposes under all defined benefit plans maintained by the
Employer, or (b) if there is no uniform method, as if the benefit
accrued not more rapidly than the slowest accrual rate permitted under
the fractional rule of Section 411(b)(1)(C) of the Code.
D. Definitions -
1. Required Aggregation Group: (a) Each qualified plan of
the Employer in which at least one Key Employee
participates or participated at any time during the
determination period (regardless of whether the Plan
has terminated), and (b) any other qualified plan of
the Employer which enables a plan described in (a) to
meet the requirements of Sections 401(a)(4) or 410 of
the Code.
2. Permissive Aggregation Group: The Required Aggregation
Group and any other plan or plans of the Employer
which, when considered as a group with the Required
Aggregation Group, would continue to satisfy the
requirements of Sections 401(a)(4) and 410 of the Code.
3. Determination Date: For any Plan Year after the first
Plan Year, the last day of the preceding Plan Year. For
the first Plan Year of the Plan, the last day of that
Year.
4. Valuation Date: For purposes of calculating the Top-
Heavy Ratio, the Valuation Date is the last day of each
Plan Year.
5. Present Value: Present Value shall be based on the
interest and mortality rates specified in the Adoption
Agreement.
10.08 SPECIAL LIMITATIONS FOR OWNER-EMPLOYEES
If this Plan provides contributions or benefits for one or more Owner-
Employees who control both the business for which this Plan is
established and one or more other trades or businesses, this Plan and
the plan established for other trades or businesses must, when
considered a single plan, satisfy Sections 401(a) and (d) of the Code
for the employees of those trades or businesses.
If the Plan provides contributions or benefits for one or more Owner-
Employees who control one or more other trades or businesses, the
employees of the other trades or businesses must be included in a plan
which satisfies Sections 401(a) and (d) of the Code and which provides
contributions and benefits not less favorable than provided for Owner-
Employees under this Plan.
If an individual is covered as an Owner-Employee under the plans of
two or more trades or businesses which are not controlled and the
individual controls a trade or business, then the contributions or
benefits of the employees under the plan of the trade or business
which is controlled must be as favorable as those provided for him
under the most favorable plan of the trade or business which is not
controlled.
For purposes of the preceding paragraphs, an Owner-Employee, or two or
more Owner-Employees, will be considered to control a trade or
business if the Owner-Employee, or two or more Owner-Employees,
together:
A. Own the entire interest in an unincorporated trade or
business; or
B. In the case of a partnership, own more than 50% of either
the capital interest or the profits interest in the
partnership.
For purposes of the immediately preceding sentence, an Owner-Employee
or two or more Owner-Employees, are treated as owning any interest in
a partnership which is owned, directly or indirectly, by a partnership
which is considered to be under the control of that Owner-Employee or
those two or more Owner-Employees, under the preceding sentence.
10.09 INALIENABILITY OF BENEFITS
No benefit or interest available under this Plan is subject to
alienation, anticipation, assignment, charge, encumbrance, pledge,
sale or transfer, either voluntarily or involuntarily. This
prohibition against alienation or assignment applies to any attempt to
obtain any portion of a Participant's Plan benefits under a domestic
relations order, unless that order is determined to be a qualified
domestic relations order under Section 414(p) of the Code.
Generally, a domestic relations order cannot be a qualified domestic
relations order until January 1, 1985. However, if a domestic
relations order was entered before that date, the Plan Administrator:
1. Will treat the order as a qualified domestic relations
order if the Plan Administrator is paying benefits
under that order on that date, and
2. May treat any other domestic relations order entered
before that date as a qualified domestic relations
order, even if the order does not meet the requirements
of Section 414(p) of the Code.
32
10.10 NO DUTIES OR RESPONSIBILITIES OF PROTOTYPE SPONSOR
The Prototype Sponsor has no duties or responsibilities with respect
to the adoption, operation or termination of this Plan or with respect
to its administration, all of which are the sole responsibility of the
Employer. Furthermore, no duties or responsibilities with respect to
the Plan will be presumed or implied by reason of any services or
facilities provided to the Plan, the Employer, the Trustee (whether or
not an affiliate of the Prototype Sponsor) or any Participant by the
Prototype Sponsor or any of its affiliates.
10.11 GOVERNING LAW
This Plan is interpreted and governed under the laws of the State of
New York applicable to contracts to be performed entirely in that
State, except to the extent ERISA supersedes the application of State
law.
33
ARTICLE ELEVEN--401(k) PROVISIONS
In addition to Articles 1 through 10, the provisions of this ARTICLE
11 apply if the Employer establishes a 401(k) cash or deferred
arrangement ("CODA") by completing and signing the appropriate
Adoption Agreement.
11.01 DEFINITIONS
Capitalized words and phrases in this Article 11 have the following
meanings unless previously defined in Article 1 or where the context
clearly indicates otherwise:
A. Actual Deferral Percentage ("ADP"): For any specified group
of Participants for a Plan Year, the average of the ratios
(calculated separately for each Participant in the group) of
(1) the amount of Employer Contributions actually paid over
to the Fund on behalf of each Participant for the Plan Year
to (2) that Participant's "compensation" (using any
permissible measure of compensation under Section 414(s) of
the Code and applicable Treasury Regulations) for that Plan
Year (regardless of whether he or she was a Participant for
the entire Plan Year). In calculating the ADP, Employer
Contributions include: (1) any Elective Deferrals made under
the Participant's deferral election, including Excess
Elective Deferrals of Highly Compensated Employees, but
excluding (a) Excess Elective Deferrals of Participants who
are not Highly Compensated Employees that arise solely from
Elective Deferrals made under the Plan or plans of the
Employer, and (b) Elective Deferrals that are taken into
account in the Average Contribution Percentage test (so long
as the ADP test is satisfied both with and without including
these Elective Deferrals), and (2) at the election of the
Employer, Qualified Nonelective Contributions and Qualified
Matching Contributions. In determining the Actual Deferral
Percentages, an Employee who would be a Participant but for
the failure to make Elective Deferrals is treated as a
Participant on whose behalf no Elective Deferrals are made.
B. After-Tax Employee Contribution: Any contribution made to
the Plan by or on behalf of a Participant that is included
in the Participant's gross income in the year in which made
and that is maintained under a separate account to which
earnings and losses are allocated.
C. Aggregate Limit: The sum of (1) 125% of the greater of (a)
the ADP of Participants who are not Highly Compensated
Employees for the Plan Year or (b) the ACP of Participants
who are not Highly Compensated Employees under the Plan
subject to Section 401(m) of the Code for the Plan Year
beginning with or within the Plan Year of the CODA and (2)
the lesser of (x) 200% or (y) 2 plus the lesser of that ADP
or ACP. "Lesser" is substituted for "greater" in (1), above,
and "greater" is substituted for "lesser" in (2)(y), above,
if those substitutions would increase the Aggregate Limit.
D. Average Contribution Percentage ("ACP"): The average of the
Contribution Percentages of the Eligible Participants in a
group.
E. Contributing Participant: A Participant who has enrolled as
a Contributing Participant under Section 11.02 and on whose
behalf the Employer is contributing Elective Deferrals to
the Plan.
F. Contribution Percentage: The ratio (expressed as a
percentage) of a Participant's Contribution Percentage
Amounts to his or her Compensation for the Plan Year
(regardless of whether he or she was a Participant for the
entire Plan Year).
G. Contribution Percentage Amounts: The sum of the After-Tax
Employee Contributions, Matching Contributions, and
Qualified Matching Contributions (to the extent not counted
for passing the ADP test) made under the Plan on behalf of
the Participant for the Plan Year. Contribution Percentage
Amounts do not include Matching Contributions forfeited
either to correct Excess Aggregate Contributions or because
the contributions to which they relate are Excess Deferrals,
Excess Contributions or Excess Aggregate Contributions. If
selected in the Adoption Agreement, the Employer may include
Qualified Nonelective Contributions in the Contribution
Percentage Amounts. The Employer also may elect to use
Elective Deferrals in the Contribution Percentage Amounts so
long as the ADP test is passed before the Elective Deferrals
are used in the ACP test and continues to be passed after
excluding those Elective Deferrals that are used to meet the
ACP test.
H. Elective Deferrals: Any Employer Contributions made to the
Plan at the election of the Participant, instead of cash
compensation, including Contributions made under a salary
reduction agreement or other deferral mechanism. For any
taxable year, a Participant's Elective Deferral is the sum
of all Employer contributions made on behalf of the
Participant under an election to defer under any qualified
CODA (as described in Section 401(k) of the Code), any
simplified employee pension cash or deferred arrangement (as
described in Section 402(h)(1)(B) of the Code), any eligible
deferred compensation plan under Section 457 of the Code,
any plan described under Section 501(c)(18) of the Code, and
any Employer contributions made on the behalf of a
Participant for the purchase of an annuity contract under
Section 403(b) of the Code (or such Employer contributions
to a custodial account under Section 403(b)(7) of the Code)
under a salary reduction agreement Elective Deferrals do not
include any deferrals distributed as excess annual
additions.
A Participant's Elective Deferrals under this Plan and any
other qualified plan maintained by the Employer, during any
taxable year, cannot exceed the dollar limit of Section
402(g) of the Code in effect at the beginning of that
taxable year.
Elective Deferrals do not count to satisfy the Top-Heavy
Plan minimum allocation requirement of Section 3.01(E).
I. Eligible Participant: Any Employee who is eligible to make
an After-Tax Employee Contribution or an Elective Deferral
(if the Employer takes those contributions into account in
the calculation of the Contribution Percentage), or to
receive a Matching Contribution (including any Forfeitures)
or a Qualified Matching Contribution. If an After-Tax
Employee Contribution is required as a condition of
participation in the Plan, any Employee who would be a
Participant in the Plan if he or she made an After-Tax
Employee Contribution is treated as an Eligible Participant
on behalf of whom no After-Tax Employee Contributions are
made.
An Employee's eligibility to make Elective Deferrals under a
CODA may not be conditioned upon the com-
34
pletion of more than one (1) Year of Eligibility Service or
the attainment of more than age twenty-one (21). An
Employee's eligibility to receive Matching Contributions,
Qualified Matching Contributions, or Qualified Nonelective
Contributions may be conditioned upon the completion of up
to two (2) Years of Eligibility Service. No contributions or
benefits (other than Matching Contributions or Qualified
Matching Contributions) may be conditioned upon an
Employee's Elective Deferrals.
J. Excess Aggregate Contributions: For any Plan Year, the
excess of:
1. The total Contribution Percentage Amounts counted in
computing the numerator of the Contribution Percentage
actually made on behalf of Highly Compensated Employees
for the Plan Year, less
2. The maximum Contribution Percentage Amounts permitted
by the ACP test (determined by reducing contributions
made on behalf of Highly Compensated Employees in order
of their Contribution Percentages, beginning with the
Highly Compensated Employees with the largest
Contribution Percentages).
Excess Aggregate Contributions are determined only after
determining Excess Elective Deferrals under Section 11.01(L)
and then determining Excess Contributions under Section
10.01(K).
K. Excess Contributions: For any Plan Year, the excess of:
1. The total amount of Employer Contributions taken into
account in computing the ADP of Highly Compensated
Employees for that Plan Year, less
2. The maximum amount of Employer Contributions permitted
by the ADP test (determined by reducing contributions
made on behalf of Highly Compensated Employees,
beginning with the Highly Compensated Employees with
the highest ADP's).
L. Excess Elective Deferrals: Any Elective Deferrals that are
includible in a Participant's gross income under Section
402(g) of the Code to the extent such Participant's Elective
Deferrals for a taxable year exceed the dollar limit under
that Code section. A Participant's Excess Elective
Deferrals are treated as annual additions under the Plan
unless such amounts are distributed no later than the first
April 15 following the close of the Participant's taxable
year.
M. Matching Contribution: An Employer contribution made to this
Plan or to any other defined contribution plan on behalf of
a Participant on account of an After-Tax Employee
Contribution made by the Participant, or on account of a
Participant's Elective Deferrals, under a plan maintained by
the Employer.
Neither Elective Deferrals nor Matching Contributions count
to satisfy the Top-Heavy Plan minimum allocation requirement
described in Section 3.01(E) except as permissible under
applicable Treasury Regulations.
N. Qualified Nonelective Contributions: Contributions (other
than Matching Contributions or Qualified Matching
Contributions) made by the Employer and allocated to
Participants' Individual Accounts that (i) the Participants
may not elect to receive in cash until distributed from the
Plan, (ii) are nonforfeitable when made and (iii) are
distributable only under the distribution provisions that
apply to Elective Deferrals and Qualified Matching
Contributions.
O. Qualified Matching Contributions: Matching Contributions
subject to the distribution and nonforfeitability
requirements under Section 401(k) of the Code when made.
11.02 PARTICIPATION
A. Enrolling As A Participant -
1. Each Employee who becomes a Participant may enroll as a
Contributing Participant. A Participant is eligible to
enroll as a Contributing Participant on the Entry Date
as of which he or she enters the Plan. If a Participant
does not enroll at that time, he or she may enroll on
the first day of any later Plan Year, or, if the Plan
Administrator permits in a uniform and
nondiscriminatory manner, on any later Entry Date. A
Participant who wishes to enroll as a Contributing
Participant must complete, sign and file a salary
reduction agreement with the Plan Administrator.
2. In addition to the times specified in Section
11.02(A)(1), the Plan Administrator has the authority
to designate, in a nondiscriminatory manner, other
enrollment times during the 12-month period beginning
on the Effective Date so that an orderly first
enrollment can be completed. If selected in the
Adoption Agreement that Elective Deferrals may be based
on cash bonuses, then Participants will be given a
reasonable period of time before the payment of those
bonuses to elect to defer part or all of those bonuses
under the Plan.
B. Changing A Salary Reduction Agreement -
A Contributing Participant may change his or her salary
reduction agreement to increase or decrease (within the
limits placed on Elective Deferrals in the Adoption
Agreement) the amount of his or her Compensation deferred
under the Plan. A change may only be made as of the first
day of a Plan Year, or as of any other more frequent date(s)
selected in the Adoption Agreement for changes to Elective
Deferrals. A Contributing Participant must complete, sign
and file a new salary reduction agreement with the Plan
Administrator within a reasonable time prescribed by the
Plan Administrator before the change is to become effective.
C. Withdrawal As A Contributing Participant -
A Participant may withdraw as a Contributing Participant as
of the last day preceding any Entry Date (or as of any other
date if the Plan Administrator so permits in a uniform and
nondiscriminatory manner) by revoking his or her
authorization to the Employer to make Elective Deferrals on
his or her behalf. A Participant who wishes to withdraw as a
Contributing Participant must give a written notice of
withdrawal to the Plan Administrator at least 30 days (or
any shorter period of days as the Plan Administrator permits
in a uniform and nondiscriminatory manner) before the
effective date of withdrawal. A Participant stops being a
Contributing Participant on his or her Termination of
Employment or on termination of the Plan.
36
D. Return As A Contributing Participant After Withdrawal -
A Participant who has withdrawn as a Contributing
Participant under Section 11.02(C) may not again become a
Contributing Participant until the first day of the first
Plan Year after the effective date of his or her withdrawal
as a Contributing Participant or as of any other date if the
Plan Administrator permits it, in a uniform and
nondiscriminatory manner.
11.03 CONTRIBUTIONS
A. Employer Contributions -
Any contribution made by the Employer must follow the
formula selected in the Adoption Agreement.
B Qualified Nonelective Contributions -
The Employer may elect to make Qualified Nonelective
Contributions under the Plan on behalf of Participants as
provided in the Adoption Agreement.
In addition, instead of distributing Excess Contributions
under Section 11.05(E), or Excess Aggregate Contributions
under Section 11.05(F), to the extent selected in the
Adoption Agreement, the Employer may make Qualified
Nonelective Contributions on behalf of Participants who are
not Highly Compensated Employees in sufficient amounts to
satisfy either the Actual Deferral Percentage test or the
Average Contribution Percentage test, or both, according to
applicable Treasury Regulations.
C. Qualified Matching Contributions -
The Employer may elect to make Qualified Matching
Contributions under the Plan on behalf of Participants as
provided in the Adoption Agreement.
D. After-Tax Employee Contributions -
If selected in the Adoption Agreement, a Participant may
contribute After-Tax Employee Contributions to the Plan,
without regard to Section 3.02.
After-Tax Employee Contributions made by a Participant are
maintained in a separate fully Vested sub-account under that
Participant's Individual Account.
If and as selected in the Adoption Agreement, a Participant
may, upon a written request submitted to the Plan
Administrator and subject to there requirements of Section
6.06 (if applicable), withdraw any part of his or her After-
Tax Employee Contribution sub-account; in all other
respects, a Participant's After-Tax Employee Contribution
sub-account is subject to the Plan's regular distribution
provisions. No Forfeiture occurs as a result of a
Participant's After-Tax Employee Contributions.
11.04 NONDISCRIMINATION TESTING
A. Actual Deferral Percentage Test -
1. Limits on Highly Compensated Employees -The ADP
for Participants who are Highly Compensated
Employees for each Plan Year and the ADP for
Participants who are not Highly Compensated
Employees for the same Plan Year must satisfy one
of the following tests:
(a) The ADP for Participants who are Highly
Compensated Employees for the Plan Year must
not be greater than the ADP for Participants
who are not Highly Compensated Employees for
the same Plan Year multiplied by 1.25; or
(b) The ADP for Participants who are Highly
Compensated Employees for the Plan Year must
not be greater than the ADP for Participants
who are not Highly Compensated Employees for
the same Plan Year multiplied by 2 and the
ADP for Participants who are Highly
Compensated Employees is not more than 2
percentage points greater than the ADP for
Participants who are not Highly Compensated
Employees.
2. Special Rules -
(a) The ADP for any Participant who is a Highly
Compensated Employee for the Plan Year and
who is eligible to have Elective Deferrals
(and Qualified Nonelective Contributions, or
Qualified Matching Contributions, or both, if
treated as Elective Deferrals for purposes of
the ADP test) allocated to his or her
accounts under two or more Employer
maintained arrangements described in Section
401(k) of the Code is determined as if the
Elective Deferrals (and, if applicable, the
Qualified Nonelective Contributions or
Qualified Matching Contributions, or both)
were made under a single arrangement. If a
Highly Compensated Employee participates in
two or more cash or deferred arrangements
that have different Plan Years, all cash or
deferred arrangements ending with or within
the same calendar year are treated as a
single arrangement; however, certain plans
are required to be treated as separate if
they are mandatorily disaggregated under
Treasury Regulations under Section 401(m) of
the Code.
(b) If this Plan satisfies the requirements of
Sections 401(k), 401(a)(4), or 410(b) of the
Code only when considered together with one
or more other plans, or if one or more other
plans satisfy the requirements of those Code
sections only when considered together with
this Plan, then Section 11.04(A)(2) is
applied by determining the ADP of Employees
as if all the plans were one plan. For Plan
Years beginning after December 31, 1989,
plans may be aggregated in order to satisfy
Section 401(k) of the Code only if they have
the same Plan Year.
(c) For purposes of determining the ADP of a
Participant who is a 5% Owner or one of the
10 most highly-paid Highly Compensated
Employees, the Elective Deferrals (and
Qualified Nonelective Contributions or
Qualified Matching Contributions, or both, if
treated as Elective Deferrals for purposes of
the ADP test) and Compensation of that
Participant include the Elective Deferrals
(and, if applicable, Qualified Nonelective
Contributions and Qualified Matching
Contributions, or both) and "compensation"
(using any permissible measure of
compensation under Section 414(s) of the Code
and applicable Treasury Regulations) for the
Plan Year of "family members" (as defined in
Section 414(o) (6) of the Code). Family
mem-
36
bers of Highly Compensated Employees are
disregarded as separate Employees in
determining the ADP both for Participants who
are not Highly Compensated Employees and for
Participants who are Highly Compensated
Employees.
(d) In order to count for the ADP test, Elective
Deferrals, Qualified Nonelective
Contributions and Qualified Matching
Contributions must be made before the last
day of the 12-month period immediately
following the Plan Year to which the
contributions relate.
(e) The Employer must maintain records to
demonstrate satisfaction of the ADP test and
the amount of Qualified Nonelective
Contributions or Qualified Matching
Contributions, or both, used in the test.
(f) The determination and treatment of the ADP
amounts of any Participant must satisfy any
other requirements prescribed by the
Secretary of the Treasury.
(g) If selected in the Adoption Agreement that
Qualified Matching Contributions are to be
counted as Elective Deferrals for purposes of
the ADP test, then (subject to any other
requirements prescribed by the Secretary of
the Treasury) only the Qualified Matching
Contributions that are needed to satisfy the
ADP test are taken into account.
(h) If the Plan Administrator determines that it
is not likely that the ADP test will be
satisfied for a particular Plan Year unless
certain steps are taken prior to the end of
the Plan Year; the Plan Administrator may
require Contributing Participants who are
Highly Compensated Employees to reduce their
Elective Deferrals for the Plan Year in order
to pass the test. The Plan Administrator may
take similar actions if it anticipates that
the Employer will not be able to deduct all
Employer Contributions for Federal income tax
purposes.
B. Limits on After-Tax Employee Contributions and Matching
Contributions-
1. Limits on Highly Compensated Employees -The Average
Contribution Percentage ("ACP"') for Participants who
are Highly Compensated Employees for each Plan Year and
the ACP for Participants who are not Highly Compensated
Employees for the same Plan Year must satisfy one of
the following tests:
(a) The ACP for Participants who are Highly
Compensated Employees for the Plan Year must not
be greater than the ACP for Participants who are
not Highly Compensated Employees for the same Plan
Year multiplied by 1.25; or
(b) The ACP for Participants who are Highly
Compensated Employees for the Plan Year must not
be greater than the ACP for Participants who are
not Highly Compensated Employees for the same Plan
Year multiplied by 2, and the ACP for Participants
who are Highly Compensated Employees must not be
more than 2 percentage points greater than the ACP
for Participants who are not Highly Compensated
Employees.
2. Special Rules
(a) Multiple Use - If one or more Highly Compensated
Employees participate in both a CODA and an
Employer plan subject to the ACP test and the sum
of the ADP and ACP of those Highly Compensated
Employees subject to either or both tests exceeds
the Aggregate Limit, then the ACP of the Highly
Compensated Employees who also participate in a
CODA are reduced (beginning with the Highly
Compensated Employee whose ACP is the highest)
until the limit is not exceeded. The amount by
which each Highly Compensated Employee's
Contribution Percentage Amounts is reduced is
treated as an Excess Aggregate Contribution. The
ADP and ACP of the Highly Compensated Employees
are determined after any corrections required to
meet the ADP and ACP tests, The Aggregate Limit
will not apply if either the ADP or ACP of the
Highly Compensated Employees does not exceed 1.25
multiplied by the ADP and ACP of the Participants
who are not Highly Compensated Employees.
(b) For purposes of this Section 11.04(B), the
Contribution Percentage for any Participant who is
a Highly Compensated Employee and who is eligible
to have Contribution Percentage Amounts allocated
to his or her Individual Account under 2 or more
plans described in Section 401(a) of the Code, or
arrangements described in Section 401(k) of the
Code that are maintained by the Employer, is
determined as if all those Contribution Percentage
Amounts were made under each plan. If a Highly
Compensated Employee participates in 2 or more
cash or deferred arrangements that have different
plan years, all cash or deferred arrangements
ending with or within the same calendar year are
treated as a single arrangement; however, certain
plans are required to be treated as separate if
they are mandatorily disaggregated under Treasury
Regulations under Section 401(m) of the Code.
(c) If this Plan satisfies the requirements of
Sections 401(m), 401(a)(4) or 410(b) of the Code
only when considered together with one or more
other plans, or if one or more other plans satisfy
the requirements of those Code Sections only if
considered together with this Plan, then this
Section 11.04(B) is applied by determining the
Contribution Percentage of Employees as if all the
plans were only one plan. For Plan Years beginning
after December 31, 1989, plans may be aggregated
in order to satisfy Section 401(m) of the Code
only if they have the same Plan Year.
(d) For purposes of determining the Contribution
Percentage of a Participant who is a 5% Owner or
one of the 10 most
37
highly-aid Highly Compensated Employees, the
Contribution Percentage Amounts and Compensation
of the Participant include the Contribution
Percentage Amounts and Compensation for the Plan
Year of "family members" (as defined in Section
414(q) (6) of the Code). FamIly members of Highly
Compensated Employees are disregarded as separate
Employees in determining the Contribution
Percentage both for Participants who are not
Highly Compensated Employees and for Participants
who are Highly Compensated Employees.
(e) In determining the Contribution Percentage, After-
Tax Employee Contributions are considered to have
been made in the Plan Year in which they are
contributed to the Fund Matching Contributions and
Qualified Nonelective Contributions are considered
made for a Plan Year as long as they are made by
the end of the 12-month period beginning on the
day after the close of the Plan Year.
(f) The Employer must maintain records to demonstrate
satisfaction of the ACP test and the amount of
Qualified Nonelective Contributions or Qualified
Matching Contributions, or both, used in the test.
(g) The determination and treatment of the
Contribution Percentage of any Participant must
satisfy any other requirements prescribed by the
Secretary of the Treasury.
(h) If selected in the Adoption Agreement that
Qualified Nonelective Contributions are to be
counted in the Contribution Percentages for the
ACP test, then (subject to any other requirements
prescribed by the Secretary of the Treasury) only
the Qualified Nonelective Contributions that are
needed to satisfy the ACP test will be counted.
(i) If the Employer elected in the Adoption Agreement
to count Elective Deferrals in the Contribution
Percentages for the ACP test, then only the
Elective Deferrals that are needed to pass the ACP
test will be counted.
11.05 DISTRIBUTION PROVISIONS
A. General Rule -
Distributions from the Plan are subject to the provisions of
Article 6 and the provisions of this Article 11. If there is
a conflict between the provisions of Article 6 and Article
11, the provisions of this Article 11 will control.
B. Distribution Requirements -
Elective Deferrals, Qualified Nonelective Contributions, and
Qualified Matching Contributions, and income allocable to
each are not distributable to a Participant or his or her
Beneficiary or Beneficiaries, in accordance with that
Participant's or Beneficiary or Beneficiaries' election,
earlier than upon the Participant's separation from service,
death, or disability.
These amounts may also be distributed after:
1. Termination of the Plan without the establishment of
another defined contribution plan by the Employer,
other than an "employee stock ownership plan" (as
defined in Section 4975(e) or Section 409 of the Code)
or a "simplified employee pension" (as defined in
Section 408(k) of the Code;
2. The disposition by a corporation to an unrelated
corporation of substantially all of the assets (within
the meaning of Section 409(d) (2) of the Code) used in
a trade or business of that corporation, if it
continues to maintain this Plan after the disposition,
but only with respect to Employees who continue
employment with the corporation acquiring the assets;
3. The disposition by a corporation to an unrelated entity
of that corporation's interest in a subsidiary (within
the meaning of Section 409(d)(3) of the Code), if it
continues to maintain this Plan, but only with respect
to Employees who continue employment with that
subsidiary;
4. The attainment of age 59-1/2, in the case of a profit-
sharing plan; or
5. If selected in the Adoption Agreement, the hardship of
the Participant as described in Section 11.05(C).
Each of these distributions is subject to any applicable
spousal and Participant consent requirements of Sections
401(a)(11) and 417 of the Code. In addition, distributions
after March 31, 1988 which are triggered by any of the
events described in items 1, 2 or 3 of this Section 11.05(B)
must be made in the form of a lump sum.
C. Hardship Distribution -
1. General - If selected in the Adoption Agreement,
distribution of Elective Deferrals (and their earnings
accrued as of December 31,1988) may be made to a
Participant in the event that the Participant needs the
distribution to meet a financial "hardship" and
provides the written representation to the Plan
Administrator described in Section 11.05(C) (3). For
this purpose, "hardship" is an immediate and heavy
financial need of the Participant for which the
Participant lacks other available resources (or where
the "hardship" involves the Participant's spouse or
dependents, for which the spouse or dependents lack
other available resources).
2. Special Rules.
(a) The only financial needs considered to be
immediate and heavy are: deductible medical
expenses (within the meaning of Section 213(d) of
the Code) incurred or necessary for the care of
the Participant or the Participant's spouse,
children or dependents; the purchase (excluding
mortgage payments) of a principal residence for
the Participant; payment of tuition and related
educational fees for the next 12 months of post-
secondary education for the Participant or the
Participant's spouse, children or dependents; or
the need to prevent the eviction of the
Participant from, or a foreclosure on the mortgage
on, the Participant's principal residence.
38
(b) A distribution will be considered necessary to
satisfy an immediate and heavy financial need of
the Participant only if:
(1) The Participant has received all
distributions, other than hardship
distributions, and all nontaxable loans under
all Employer plans;
(2) All Employer plans provide that the
Participant's Elective Deferrals (and After-
Tax Employee Contributions) will be suspended
for 12 months after the hardship
distribution;
(3) The amount of the distribution is not greater
than the amount of the immediate and heavy
financial need (including amounts necessary
to pay any Federal, state or local income
taxes or penalties reasonably anticipated to
result from the distribution); and
(4) All Employer plans prohibit the Participant
from making Elective Deferrals for the
Participant's taxable year immediately
following the Participant's taxable year in
which the hardship distribution occurred in
excess of (i) the limit under Section 402(g)
of the Code for that taxable year less
(ii)the amount of the Participant's Elective
Deferrals for the Participant's taxable year
in which the hardship distribution occurred.
3. Written Representation - The Participant's written
representation made to the Plan Administrator (and
referred to in Section 11.05(C)(1)) will be relied on
by the Plan Administrator in its determination that the
Participant has suffered a "hardship" entitling the
Participant to a distribution (unless the Plan
Administrator actually knows otherwise). The
Participant's written representation must notify the
Plan Administrator that the Participant's "hardship"
cannot reasonably be met:
(a) Through reimbursement or compensation by insurance
or otherwise;
(b) By liquidation of the Participant's assets;
(c) By other distributions, withdrawals or non-taxable
loans from plans maintained by the Employer; or
(d) By borrowing from commercial sources on reasonable
commercial terms in an amount sufficient to
satisfy the need.
D. Distribution of Excess Elective Deferrals -
1. General Rule - A Participant may assign to the Plan any
Excess Elective Deferrals made during a taxable year of
the Participant by notifying the Plan Administrator by
the date specified in the Adoption Agreement of the
amount of the Excess Elective Deferrals to be assigned
to the Plan. The Participant will be treated as if he
or she had notified the Plan Administrator of any
Excess Elective Deferrals arising only from Elective
Deferrals under this Plan and other Employer plans.
Regardless of any other Plan provision, Excess Elective
Deferrals, as adjusted for earnings and losses, will be
distributed on or before April 15 to any Participant to whose
Individual Account Excess Elective Deferrals were assigned for
the prior year and who claims Excess Elective Deferrals for that
taxable year.
2. Determination of Income or Loss - Excess Elective
Deferrals are adjusted for earnings and losses only
until the end of the taxable year preceding or
coinciding with the date of distribution, unless it has
been selected in the Adoption Agreement to have them
adjusted for earnings and losses through the date of
distribution. The income or loss allocable to Excess
Elective Deferrals is: (1) income or loss allocable to
the Participant's Elective Deferral account for the
taxable year multiplied by a fraction, the numerator of
which is the Participant's Excess Elective Deferrals
for the year and the denominator of which is the
Participant's Individual Account balance attributable
to Elective Deferrals, regardless of any income or
loss occurring during that taxable year; plus (2) if
crediting earnings and losses through the date of
distribution is selected in the Adoption Agreement, 10%
of the amount determined under (1) multiplied by the
number of whole calendar months between the end of the
Participant's taxable year and the date of
distribution, counting the month of distribution if the
distribution occurs after the 15th of that month.
E. Distribution of Excess Contributions -
1. General Rule - Regardless of any other Plan provision,
Excess Contributions, as adjusted for earnings and
losses, will be distributed on or before the last day
of each Plan Year to Participants to whose Individual
Accounts those Excess Contributions were allocated for
the preceding Plan Year. If those Excess Amounts are
distributed more than 2-1/2 months after the last day
of the Plan Year in which the Excess Amounts arose, a
10% excise tax is imposed on the Employer maintaining
the Plan based on those amounts. These distributions
are made to Highly Compensated Employees on the basis
of their respective portions of the Excess
Contributions. Excess Contributions are allocated to
Participants who are subject to the family member
aggregation rules of Section 414(q) (6) of the Code in
proportion to the combined Elective Deferrals (and
amounts treated as Elective Deferrals) of each family
member that are combined to determine the combined ADP.
Excess Contributions (including the amounts
recharacterized) are treated as "annual additions"
under the Plan.
2. Determination of Income or Loss - Excess Contributions
are adjusted for earnings and losses only until the end
of the Plan Year preceding or coinciding with the date
of distribution, unless selected in the Adoption
Agreement that they will be adjusted for earnings and
losses through the date of distribution. The income or
loss allocable to Excess Contributions is: (1) income
or loss allocable to the Participant's Elective
Deferral account (and, if applicable, the Qualified
Nonelective Contribution account or
39
the Qualified Matching Contributions account or both)
for the Plan Year multiplied by a fraction, the
numerator of which is the Participant's Excess
Contributions for the year and the denominator of which
is the Participant's Individual Account balance
attributable to Elective Deferrals (and Qualified
Nonelective Contributions or Qualified Matching
Contributions, or both, if any of those contributions
are included in the ADP test), without regard to any
income or loss occurring during that Plan Year; plus,
(2) if crediting earnings and losses through the date
of distribution is selected in the Adoption Agreement,
10% of the amount determined under (1) multiplied by
the number of whole calendar months between the end of
the Plan Year and the date of distribution, counting
the month of distribution if distribution occurs after
the 15th of that month.
3. Accounting for Excess Contributions - Excess
Contributions are distributed from the Participant's
Elective Deferral account and Qualified Matching
Contribution account (if applicable) in proportion to
the Participant's Elective Deferrals and Qualified
Matching Contributions (to the extent used in the ADP
test) for the Plan Year. Excess Contributions are
distributed from the Participant's Qualified
Nonelective Contribution account only to the extent
that they exceed the balance in the Participant's
Elective Deferral account and Qualified Matching
Contribution account.
F. Distribution of Excess Aggregate Contributions -
1. General Rule -Regardless of any other Plan provision,
Excess Aggregate Contributions, as adjusted for
earnings and losses, are forfeited, if forfeitable, or
if not forfeitable, distributed no later than the last
day of each Plan Year to Participants to whose accounts
those Excess Aggregate Contributions were allocated for
the preceding Plan Year. Excess Aggregate Contributions
of Participants who are subject to the family member
aggregation rules of Section 414(q)(6) of the Code are
allocated to those family members in proportion to the
Employee and Matching Contributions (or amounts treated
as Matching Contributions) of each family member
combined to determine the combined ACP. If those Excess
Aggregate Contributions are distributed more than 2-1/2
months after the last day of the Plan Year in which
they arose, a 10% excise tax is imposed on the Employer
maintaining the Plan based on those amounts.
Excess Aggregate Contributions are treated as "annual
additions" under the Plan.
2. Determination of Income or Loss - Excess Aggregate
Contributions are adjusted for earnings and losses only
until the end of the Plan Year preceding or coinciding
with the date of distribution, unless selected in the
Adoption Agreement that they will be adjusted through
the date of distribution. The income or loss allocable
to Excess Aggregate Contributions is: (1) income or
loss allocable to the Participant's After-Tax Employee
Contribution account, Matching Contribution account,
Qualified Matching Contribution account (if any, and if
all of these amounts are not used in the ADP test) and,
if applicable, Qualified Nonelective Contribution
account and Elective Deferral account for the Plan Year
multiplied by a fraction, the numerator of which is the
Participant's Excess Aggregate Contributions for the
year and the denominator of which is the Participant's
Individual Account balance(s) attributable to
Contribution Percentage Amounts without regard to any
income or loss occurring during the Plan Year, plus,
(2) if crediting earnings and losses through the date
of distribution is selected on the Adoption Agreement,
10% of the amount determined under (1) multiplied by
the number of whole calendar months between the end of
the Plan Year and the date of distribution counting the
month of distribution if distribution occurs after the
15th of the month.
3. Forfeitures of Excess Aggregate Contributions -
Forfeitures of Excess Aggregate Contributions are
either reallocated to the accounts of Contributing
Participants who are not Highly Compensated Employees
or applied to reduce Employer Contributions, as
selected in the Adoption Agreement.
4. Accounting for Excess Aggregate Contributions -Excess
Aggregate Contributions are forfeited, if forfeitable,
or distributed ratably from the Participant's After-Tax
Employee Contribution account, Matching Contribution
account, and Qualified Matching Contribution account
(and, if applicable, the Participant's Qualified
Nonelective Contribution account or Elective Deferral
account, or both).
G. Recharacterization -
A Participant may treat his or her Excess Contributions as
an amount distributed to the Participant and then
contributed by the Participant to the Plan. These
recharacterized amounts remain Vested and subject to the
same distribution requirements as Elective Deferrals.
Amounts may not be recharacterized by a Highly Compensated
Employee to the extent that those amounts in combination
with other After-Tax Employee Contributions made by that
Highly Compensated Employee would exceed any stated Plan
limit on After-Tax Employee Contributions.
Recharacterization must occur no later than 2-1/2 months
after the last day of the Plan Year in which the Excess
Contributions arose and is treated as if it had occurred no
earlier than the date the last Highly Compensated Employee
was informed in writing of the amount recharacterized and
the consequences of that recharacterization. Recharacterized
amounts will be taxable to the Participant for the
Participant's taxable year in which the Participant would
have received them in cash.
11.06 VESTING
A. Certain Contributions are 100% Vested -
The Participant's accrued benefit attributable to Elective
Deferrals, Qualified Nonelective Contributions, After-Tax
Employee Contributions, and Qualified Matching Contributions
is 100% Vested Separate accounts for Elective Deferrals,
Qualified Nonelective Contributions, After-Tax Employee
Contributions, MatIng Contributions, and Qualified Matching
Contributions are maintained for each
40
Participant. Each account is created with its applicable
contributions, earnings and losses.
B. Forfeitures and Vesting Of Matching Contributions -
Matching Contributions become Vested according to the
vesting schedule selected for Matching Contributions in the
Adoption Agreement. Matching Contributions always become
fully Vested at Normal Retirement Age, upon the complete or
partial termination of the Plan (only with respect to
affected Participants, in the case of a partial
termination), or upon the total discontinuance of Employer
Contributions.
Forfeitures of Matching Contributions, other than Excess
Aggregate Contributions, are treated in the manner described
in Section 6.01(D).
11.07 EFFECTIVE TIME
The provisions of the CODA may be made effective as of the first day
of the Plan Year in which the CODA is adopted. However, under no
circumstances may a salary reduction agreement or other deferral
mechanism be adopted retroactively.
41
ARTICLE TWELVE--
TARGET BENEFIT PROVISIONS
In addition to Articles 1 through 11, the provisions of this ARTICLE 12 apply if
the Employer adopts the Plan in the form of a "Target Benefit Plan" by
completing and signing the appropriate Adoption Agreement.
12.01 DEFINITIONS
Capitalized words and phrases in this Article 12 have the following
meanings unless previously defined in Article 1 or where the context
clearly indicates otherwise:
A. Avenge Compensation: Average Compensation means, the
average of a Participant's annual Compensation over the
three consecutive Plan Year periods ending in the current
year or in any prior year that produces the highest
average. If the Participant has less than three years of
participation in this Plan, Compensation is averaged over
the Participant's total period of participation.
B. Benefitting: A Participant is treated as Benefitting under
the Plan for any Plan Year during which he or she is deemed
to receive an allocation under Treasury Regulation Section
1.401(a)(4)-12.
C. Covered Compensation: The average (without indexing) of the
Target Benefit Taxable Wage Bases in effect for each
calendar year during the 35-year period ending with the
last day of the calendar year in which the Participant
attains or will attain his or her Social Security
Retirement Age. In determining a Participant's Covered
Compensation for a Plan Year, the Target Benefit Taxable
Wage Base in effect for the current Plan Year and any
subsequent Plan Year will be assumed to be the same as the
Target Benefit Taxable Wage Base in effect as of the
beginning of the Plan Year for which the determination is
being made. Covered Compensation will be determined on the
basis of the year selected in Section VII of the Adoption
Agreement. A Participant's Covered Compensation for a Plan
Year before the 35-year period ending with the last day of
the calendar year in which the Participant attains his or
her Social Security Retirement Age is the Target Benefit
Taxable Wage Base in effect as of the beginning of the Plan
Year. A Participant's Covered Compensation for a Plan Year
after such 35-year period is the Participant's Covered
Compensation for the Plan Year in which the 35-year period
ends.
D. Current Target Benefit: For each Participant, the product
of (1) multiplied by (2), where (1) is the amount derived
from the benefit formula selected in the Adoption Agreement
and (2) is a fraction, the numerator of which is the
Participant's number of Years of Participation in the Plan
for benefit accrual purposes since the most recent Fresh-
Start Date, if any, through and including the later of the
year in which the Participant attains Normal Retirement Age
or the current Plan Year, and the denominator of which is
the Participant's "total years of projected participation"
under the Plan. If there has been no Fresh-Start Date under
the Plan, the fraction will be 1.0 for all Participants. In
addition, the fraction will be 1.0 for any Participant
first entering the Plan after the most recent Fresh-Start
Date. A Participant's "total years of projected
participation" under the Plan refers only to those years in
which the Plan satisfies the requirements of Treasury
Regulation Section 1.401(a)(4)-8(b)(3) (or any other
applicable prior target benefit plan safe harbor) projected
through the later of the end of the Plan Year in which the
Participant attains Normal Retirement Age or the current
Plan Year.
E. Final Average Compensation: The average of a Participant's
Compensation for the 3-consecutive Plan Year period ending
with or within the Plan Year. If a Participant's entire
period of employment with the Employer is less than 3
consecutive Plan Years, his or her Compensation is averaged
over the Participant's entire period of employment with the
Employer. Compensation for any Plan Year in excess of the
Target Benefit Taxable Wage Base in effect at the beginning
of that Year will not be taken into account.
F. Fresh-Start Date: The last day of a Plan Year preceding a
Plan Year for which provisions that would affect the amount
of the Current Target Benefit are amended.
G. Frozen Accrued Target Benefit: The benefit determined as of
the Plan's most recent Fresh-Start Date as if the
Participant terminated employment with the Employer as of
that Date, without regard to any amendment made to the Plan
after that Date. This Benefit is equal to the amount of the
Current Target Benefit accrued by the Participant as of the
most recent Fresh-Start Date, assuming that the Current
Target Benefit accrues ratably from the later of the year
in which the Participant first participated in the Plan or
the most recent Fresh-Start Date, if any, through the Plan
Year in which the Participant attains Normal Retirement
Age, and is determined by multiplying the Current Target
Benefit formula under the Plan by a fraction, the numerator
of which is the Participant's number of Years of
Participation in the Plan from the later of the
Participant's first Year of Participation in the Plan or
the most recent Fresh-Start Date, if any, through the year
in which the most recent Fresh-Start Date, if any,
occurred, and the denominator of which is the Participant's
number of Years of Participation in the Plan from the later
of the Participant's first Year of Participation in the
Plan or the most recent Fresh-Start Date, if any, through
the later of the year in which the Participant attains
Normal Retirement Age or the current Plan Year. If in the
immediately preceding Plan Year, the Plan did not satisfy
the requirements of Treasury Regulation Section
1.401(a)(4)-8(b)(3) (or any other applicable prior target
benefit plan safe harbor), the Frozen Accrued Target
Benefit for any Participant, as determined for the next
Plan Year during which the requirements of Treasury
Regulation Section 1.401(a)(4)-8(b)(3) are satisfied until
the year following the year containing the next Fresh-
Start Date, if any, will be zero.
H. Social Security Retirement Age: Age 65 with respect to a
Participant born before January 1, 1938; age 66 with
respect to a Participant born after December 31, 1937 and
prior to January 1, 1955; and age 67 with respect to a
Participant born after December 31, 1954.
L. Straight Life Annuity: A retirement benefit payable under
the Plan in the form of an annuity payable in equal monthly
installments for the duration of the Participant's life and
which terminates at the Participant's death.
J. Target Benefit: The benefit payable in the form of a
Straight Life AnnuIty commencing at the Participant's
retirement at or after his or her attainment of Normal
Retirement Age and which is the sum of the Participant's
Frozen Accrued and Current Target
42
Benefits, but which may be greater or less than the Plan
benefit actually available for distribution from the Plan to
a Participant or Beneficiary.
K. Target Benefit Taxable Wage Base: The contribution and
benefit base in effect at the beginning of the Plan Year
under Section 230 of the Social Security Act.
L. Year of Participation: Each year for which Plan benefits
are accruing for a Participant.
M. Years of Projected Participation: The sum of (1) and (2),
where (1) is the number of years during which the
Participant Benefitted under the Plan beginning with the
latest of (a) the first Plan Year in which the Participant
Benefitted under the Plan, (b) the first Plan Year taken
into account in the Target Benefit formula and (c) any Plan
Year immediately following a Plan Year in which the Plan did
not satisfy the requirements of Treasury Regulation Section
1.401(a)(4)-8(b)(3), and ending with the last day of the
current Plan Year, and (2) is the number of years, if any,
after the current Plan Year through the end of the Plan Year
in which the Participant will attain his or her Normal
Retirement Age.
For purposes of this definition, if this Plan is a "prior
safe harbor plan" (as defined below), the Plan is deemed to
satisfy the safe harbor for target benefit plans in Treasury
Regulation Section 1.401(a)(4)-8(b)(3) and a Participant is
treated as benefiting under the Plan in any Plan Year
beginning prior to January 1, 1994.
A "prior safe harbor plan" is a plan that (1) was adopted
and in effect on September 19,1991, (2) which on that date
contained a stated benefit formula that took into account
service prior to that date, and (3) satisfied the applicable
nondiscrimination requirements for target benefit plans for
those prior years. For purposes of determining whether the
Plan satisfies the applicable nondiscrimination requirements
for target benefit plans for Plan Years beginning before
January 1, 1994, no amendments after September 19, 1991,
other than amendments necessary to satisfy Section 401(1) of
the Code, will be taken into account.
12.02 EMPLOYER CONTRIBUTIONS
The Employer will contribute annually the amount necessary to fund each
Participant's Target Benefit, determined each year as follows:
First: Determination of Present Value of Target Benefit -
A. If the Participant has not yet attained Normal Retirement
Age, the present value of his or her Target Benefit is
determined by multiplying the Target Benefit selected in the
Adoption Agreement by the product of (1) the applicable
factor in Table I (if the Participant has not attained age
65) or Table IA (if the Participant has attained an age
which is equal to or greater than age 65), by (2) the
applicable factor in Table III.
B. If the participant has attained an age which is equal to or
greater than Normal Retirement Age, the present value of his
or her Target Benefit is determined by multiplying the
Target Benefit by the applicable factor in Table IV.
Second: Calculation of Theoretical Reserve -
For purposes of this Section, the theoretical reserve is determined
according to (A) and (B) below:
A. Initial theoretical reserve. A Participant's theoretical
reserve as of the last day of the Participant's first year
of projected participation (year 1) is zero. However, if
this Plan is a prior safe harbor plan with a Target Benefit
formula that takes into account Plan Years prior to the
first Plan Year this Plan satisfies the safe harbor in
Treasury Regulation Section 1.401(a)(4)-8(b)(3)(c), the
initial theoretical reserve is determined as follows:
1. Calculate as of the last day of the Plan Year
immediately preceding year 1 the present value of the
Target Benefit, using the actuarial assumptions, the
provisions of the Plan, and the Participant's
Compensation as of such date. For a Participant who is
beyond Normal Retirement Age during year 1, the Target
Benefit will be determined using the actuarial
assumptions, the provisions of the Plan, and the
Participant's Compensation as of such date, except that
the straight life annuity factor used in that
determination will be the factor applicable for the
Participant's Normal Retirement Age.
2. Calculate as of the last day of the Plan Year
immediately preceding year 1 the present value of
future Employer Contributions, i.e, the contributions
due each Plan Year using the actuarial assumptions, the
provisions of the Plan, (disregarding those provisions
of the Plan providing for the limitations of Section
415 of the Code or the minimum contributions under
Section 416), and the Participant's Compensation as of
such date, beginning with year 1 through the end of the
Plan Year in which the Participant attains Normal
Retirement Age.
3. Subtract the amount determined in (2) from the amount
determined in (1).
B. Accumulate the initial theoretical reserve determined in (A)
and the Employer Contribution (as limited by Section 415 of
the Code, but without regard to any required minimum
contributions under Section 416) for each Plan Year
beginning in year 1 up through the last day of the current
Plan Year (excluding contribution(s) (if any) for the
current Plan Year) using the Plan's interest assumption in
effect for each such year. In any Plan Year following the
Plan Year in which the Participant attains Normal Retirement
Age, the accumulation is calculated assuming an interest
rate of 0%.
For purposes of determining the level of annual Employer
Contribution necessary to fund the Target Benefit, the
calculations in (A) and (B) above will be made as of the
last day of each Plan Year, on the basis of the
Participant's age on the Participant's last birthday, using
the interest rate in effect on the last day of the prior
Plan Year.
Third: Calculate the excess, if any, of the present value of the Target
Benefit determined under paragraph First over the theoretical reserve
determined under paragraph Second.
Fourth: Amortize the result obtained under paragraph Third by multiplying
the amount determined under paragraph Third by the applicable factor in
Table II. (For the Plan Year in which the Participant attains Normal
Retirement Age and for subsequent Plan Years the applicable factor is 1.0.)
This is the amount of the Employer's required contribution for the current
Plan Year (subject, however, to the limitations under Section 3.05 and
without regard to any minimum Employer Contribution required under Section
3.01(E)) to fund the
43
Participant's Target Benefit.
12.03 EMPLOYEE CONTRIBUTIONS
No Employee contributions will be required or permitted to fund the Target
Benefit.
12.04 FORFEITURES
All Forfeitures under the Plan will be used to reduce Employer
Contributions required under the Plan.
12.05 TABLES
TABLE I: PRESENT VALUE FACTORS (SEE * BELOW)
Number of years
from attained
age to age 65 Interest Rate
------------- -------------
7.50% 8.00% 8.50%
1 7.868 7.589 7.326
2 7.319 7.027 6.752
3 6.808 6.506 6.223
4 6.333 6.024 5.736
5 5.891 5.578 5.286
6 5.480 5.165 4.872
7 5.098 4.782 4.491
8 4.742 4.428 4.139
9 4.412 4.100 3.815
10 4.104 3.796 3.516
11 3.817 3.515 3.240
12 3.551 3.255 2.986
13 3.303 3.014 2.752
14 3.073 2.790 2.537
15 2.859 2.584 2.338
16 2.659 2.392 2.155
17 2.474 2.215 1.986
18 2.301 2.051 1.831
19 2.140 1.899 1.687
20 1.991 1.758 1.555
21 1.852 1.628 1.433
22 1.723 1.508 1.321
23 1.603 1.396 1.217
24 1.491 1.293 1.122
25 1.387 1.197 1.034
26 1.290 1.108 0.953
27 1.200 1.026 0.878
28 1.116 0.950 0.810
29 1.039 0.880 0.746
30 0.966 0.814 0.688
31 0.899 0.754 0.634
32 0.836 0.698 0.584
33 0.778 0.647 0.538
34 0.723 0.599 0.496
35 0.673 0.554 0.457
36 0.626 0.513 0.422
37 0.582 0.475 0.389
38 0.542 0.440 0.358
39 0.504 0.407 0.330
40 0.469 0.377 0.304
41 0.436 0.349 0.280
42 0.406 0.323 0.258
43 0.377 0.299 0.228
44 0.351 0.277 0.219
45 0.327 0.257 0.202
* If a Participant's attained age is at or above 65 but still below
Normal Retirement Age, use Table IA. Note: These factors are based on the
UP-1984 Mortality Table.
TABLE IA: PRESENT VALUE FACTORS FOR PARTICIPANTS YOUNGER THAN NORMAL
RETIREMENT AGE (TO BE USED ONLY WHEN ATTAINED AGE IS GREATER THAN OR EQUAL
TO 65)
Number of years
from age 65
to attained age Interest Rate
--------------- -------------
7.50% 8.00% 8.50%
0 8.458 8.196 7.949
1 9.092 8.852 8.625
2 9.774 9.560 9.358
3 10.507 10.325 10.153
4 11.295 11.151 11.016
5 12.143 12.043 11.953
6 13.053 13.006 12.969
7 14.032 14.047 14.071
8 15.085 15.170 15.267
9 16.216 16.384 16.565
10 17.432 17.695 17.973
11 18.740 19.110 19.500
12 20.145 20.639 21.158
13 21.656 22.290 22.956
14 23.280 24.073 24.907
15 25.026 25.999 27.025
Note: These factors are based on the UP-1984 Mortality Table.
TABLE II: AMORTIZATION FACTORS
Number of years from
attained age to
Normal Retirement Age Interest Rate
--------------------- -------------
7.50% 8.00% 8.50%
1 0.5181 0.5192 0.5204
2 0.3577 0.3593 0.3609
3 0.2777 0.2796 0.2814
4 0.2299 0.2319 0.2339
5 0.1982 0.2003 0.2024
6 0.1756 0.1778 0.1801
7 0.1588 0.1611 0.1634
8 0.1458 0.1482 0.1506
9 0.1355 0.1380 0.1405
10 0.1272 0.1297 0.1323
11 0.1203 0.1229 0.1255
12 0.1145 0.1171 0.1198
13 0.1096 0.1123 0.1151
14 0.1054 0.1082 0.1110
15 0.1018 0.1046 0.1075
16 0.0986 0.1015 0.1044
17 0.0958 0.0988 0.1018
18 0.0934 0.0964 0.0994
19 0.0912 0.0943 0.0974
20 0.0893 0.0924 0.0956
21 0.0876 0.0908 0.0940
22 0.0861 0.0893 0.0925
23 0.0847 0.0879 0.0912
24 0.0835 0.0867 0.0901
25 0.0823 0.0857 0.0890
26 0.0813 0.0847 0.0881
27 0.0804 0.0838 0.0872
28 0.0795 0.0830 0.0865
29 0.0788 0.0822 0.0858
30 0.0781 0.0816 0.0851
31 0.0774 0.0810 0.0846
32 0.0768 0.0804 0.0840
33 0.0763 0.0799 0.0836
34 0.0758 0.0794 0.0831
35 0.0753 0.0790 0.0827
36 0.0749 0.0786 0.0824
37 0.0745 0.0783 0.0820
38 0.0742 0.0779 0.0817
39 0.0739 0.0776 0.0815
40 0.0736 0.0774 0.0812
41 0.0733 0.0771 0.0810
42 0.0730 0.0769 0.0808
43 0.0728 0.0767 0.0806
44 0.0726 0.0765 0.0804
45 0.0724 0.0763 0.0802
TABLE III: FACTORS TO BE MULTIPLIED BY THOSE IN TABLE I.
Normal
Retirement Age Interest Rate
-------------- -------------
7.50% 8.00% 8.50%
80 0.206 0.194 0.184
79 0.231 0.219 0.207
78 0.258 0.246 0.234
77 0.289 0.276 0.263
76 0.322 0.309 0.296
75 0.359 0.346 0.333
74 0.400 0.387 0.347
73 0.446 0.432 0.419
72 0.495 0.482 0.469
71 0.549 0.537 0.525
70 0.609 0.597 0.586
69 0.674 0.664 0.653
68 0.745 0.736 0.728
67 0.822 0.816 0.810
66 0.907 0.904 0.900
65 1.000 1.000 1.000
64 1.101 1.106 1.110
63 1.212 1.221 1.231
62 1.332 1.348 1.363
61 1.464 1.486 1.509
60 1.606 1.637 1.669
59 1.761 1.802 1.844
58 1.929 1.982 2.036
57 2.111 2.177 2.246
56 2.309 2.390 2.475
55 2.523 2.622 2.726
Note: These factors are based on the UP-1984 Mortality Table.
45
TABLE IV: FACTORS FOR PARTICIPANTS WHO ARE AT OR OLDER THAN NORMAL
RETIREMENT AGE.
Normal
Retirement Age Interest Rate
-------------- --------------
7.50% 8.00% 8.50%
80 5.151 5.053 4.959
79 5.370 5.264 5.162
78 5.591 5.476 5.366
77 5.814 5.690 5.572
76 6.039 5.905 5.777
75 6.266 6.122 5.985
74 6.494 6.339 6.192
73 6.721 6.556 6.398
72 6.947 6.771 6.603
71 7.171 6.983 6.804
70 7.392 7.192 7.003
69 7.610 7.399 7.198
68 7.825 7.601 7.389
67 8.037 7.801 7.577
66 8.248 7.999 7.764
65 8.458 8.196 7.949
64 8.666 8.390 8.131
63 8.870 8.581 8.311
62 9.072 8.770 8.485
61 9.270 8.954 8.657
60 9.463 9.133 8.825
59 9.651 9.307 8.986
58 9.834 9.477 9.143
57 10.012 9.641 9.295
56 10.186 9.801 9.442
55 10.354 9.955 9.585
Note: These factors are based on the UP-1984 Mortality Table.
46
